GBP/USD remains limited below 1.2700 ahead of UK CPI data

• The Pound drifts lower to the mid-range of 1.2600.
• Wednesday´s UK inflation might give a fresh boost to GBP volatility.
• GBP/USD is expected to find support at the 1.2600 area – Scotiabank.

The Sterling is drifting lower on Monday, with upside attempts capped below 1.2700, following rejection at 1.2790 last Friday, as hawkish Fed officials came to the US Dollar´s rescue.

Fed Williams surprised the market, downplaying hopes of fed cuts in March. Shortly afterwards, he was backed by Atlanta Fed President, Raphael Bostic, observing that he does not expect any monetary easing before the third quarter of 2024.

These comments provided some support to a depressed Dollar, which has been suffering after the Federal Reserve signalled a dovish pivot, following its monetary policy meeting last Wednesday.

The calendar is light today and the investors await Wednesday´s UK CPI data to confirm last week´s hawkish monetary policy statement by the BoE.

In the US, the highlight is on Friday, with a string of key US indicators, namely the US PCE Prices Index, which might help to define the timing of the Federal Reserve´s first rate cuts.

GBP/USD to find support at the 1.2600/20 area – Scotiabank

The Technical Analysis team at Scotia Bank expects the pair to extend its correction towards the 1.2600 area: The GBP/USD pair traded positively overall last week but late week losses off the 1.2794 high are extending so far today and more corrective losses may be in order in the short run (...) Cable should find support on dips to the 1.2600/1.2620 area, however, with short, medium and long-term trend signals still aligned bullishly despite losses since Friday’s peak.”

Technical levels to watch