GBP/USD tries to push north through near-term congestion

• GBP/USD gained nearly one-fifth of a percent on Tuesday.
• Cable bulls are testing the high end of recent consolidation.
• Greenback traders will be hunkering down ahead of Wednesday’s US CPI.

GBP/USD found some room on the high side on Tuesday, gaining almost 0.2% and inching back toward the 1.2800 handle, grasping for the key price level that has flummoxed bullish momentum in recent days. Cable traders are buckling up for the wait to Wednesday’s US Consumer Price Index (CPI) inflation update.

GBP-centric data is limited this week, with the UK showing strictly mid-tier economic releases on the calendar, leaving Cable to singularly face this Wednesday’s CPI inflation print, which serves as one of the last key data releases before the Federal Reserve’s (Fed) last policy meeting in 2024. Signs that progress on inflation has stalled could kill hopes for a third consecutive rate cut on December 18. At the current cut, Wednesday’s US CPI inflation for November is expected to rise slightly to 2.7% YoY from the previous 2.6%, while core annualized CPI is forecast to hold steady at 3.3%.

According to the CME’s FedWatch Tool, rate traders are pricing on 85% odds of one last quarter-point rate cut for the year.

GBP/USD price forecast

GBP/USD is battling near-term chart churn near the 1.2800 handle, with the pair suspending in a dead zone just south of the 200-day Exponential Moving Average (EMA) near 1.2830. Price action has made a slow, trudging recovery after bottoming out near 1.2500 in late November, but bullish momentum is running into trouble and another leg lower could be chalked into the chart if the 200-day EMA stops being a target and becomes a hard technical barrier.

GBP/USD daily chart