GBP/USD consolidates in a range around 1.2700 mark, eyes UK CPI for fresh impetus

• GBP/USD remains confined in a narrow range on Wednesday ahead of the UK CPI.
• Tuesday’s softer US Retail Sales undermine the USD and lend support to the major.
• The subdued price action warrants caution before positioning for meaningful gains.

The GBP/USD pair struggles to gain any meaningful traction on Wednesday and oscillates in a narrow trading band, around the 1.2700 round-figure mark during the Asian session. Spot prices, meanwhile, hold above a one-month low touched last Friday as traders keenly await the release of the latest UK consumer inflation figures before positioning for the next leg of a directional move. 

The headline UK CPI is expected to tick higher and come in at 0.4% in May versus the previous print of 0.3%, while the yearly rate is seen decelerating to 3.5% from 3.9% in April. The data will play a key role in influencing the British Pound (GBP) and provide some impetus to the GBP/USD pair. The market attention will then turn to the Bank of England (BoE) monetary policy meeting on Thursday, which will help determine the near-term trajectory for the currency pair.

Heading into the key data/central bank event risks, subdued US Dollar (USD) price action turns out to be a key factor acting as a tailwind for the GBP/USD pair. The softer-than-expected US Retail Sales report released on Tuesday pointed to signs of exhaustion among consumers and reaffirmed bets that the Federal Reserve (Fed) might start cutting interest rates in September. This led to the overnight decline in the US Treasury bond yields and is seen undermining the buck. 

The aforementioned fundamental backdrop supports prospects for some meaningful appreciating move for the GBP/USD pair. That said, the lack of any follow-through buying warrants some caution before positioning for an extension of the recent bounce from the vicinity of mid-1.2600s, or a one-month low touched last Friday.