GBP/USD off highs, returns to 1.2230 ahead of CPI

After climbing as high as the 1.2270 area during overnight trade, GBP/USD has now lost some vigour and has returned to the 1.2235/30 band.

GBP/USD attention to CPI results

The pair is advancing for the second session in a row today following the renewed offered bias around the greenback during the first half of the week, as market participants continue to digest recent tepid results from the US docket.

Later in the session GBP will take centre stage in light of the publication of UK’s inflation figures for the month of September. Prior surveys expect headline consumer prices to have risen at an annualized 0.8%, while core prices are seen advancing 1.4% over the last twelve months.

GBP is trading on a sideline theme with support around the 1.2080 area, as fears of a ‘hard Brexit’ seem to have dwindled somewhat while the upside momentum in Gilts yields remain supportive of the currency.

Regarding positioning and according to the latest CFTC report, GBP speculative net shorts have been trimmed a tad during the week ended on October 11 although they still remain in record levels.

GBP/USD levels to consider

As of writing the pair is gaining 0.39% at 1.2231 and a break above 1.2377 (high Oct.11) would open the door to 1.2644 (20-day sma) and finally 1.2761 (high pre-‘flash crash’ Oct.7). On the flip side, the immediate support lines up at 1.2086 (low Oct.11) ahead of 1.1450 (low post-‘flash crash’ Oct.7).