GBP/USD Price Analysis: Cable dribbles around resistance-turned-support near 1.2770 ahead of UK inflation

• GBP/USD pauses corrective bounce off one-week low after two-day losing streak as UK inflation data looms.
• Overbought RSI suggests further grinding of Cable prices toward the south but 10-DMA, May’s peak can prod bears.
• Pound Sterling needs clear break of 1.2850 and upbeat UK CPI to aim for the 1.3000 psychological magnet.

GBP/USD fades corrective bounce off weekly low as it retreats to 1.2760 amid the early hours of Wednesday’s Asian session, sidelined of late. In doing so, the Cable pair inability to defend the previous week’s upside break of a five-month-old resistance line amid the overbought RSI conditions. It’s worth noting that the Pound Sterling’s latest inaction could be linked to the market’s cautious mood ahead of the UK’s top-tier inflation clues including the Consumer Price Index (CPI) for May.

Also read: GBP/USD retraces below 1.2800 on a strong USD, ahead of Powell testimony, BoE’s decision

Given the overbought RSI (14) line and the Cable pair’s inability to stay beyond the key resistance line, the GBP/USD bears are well-set to extend the previous two-day downtrend. However, the previous monthly high join the 10-DMA to highlight the 1.2685-80 region as the short-term key support zone for them to conquer to tighten the grip.

Also acting as a short-term downside filter is an upward-sloping trend line from June 05, close to 1.2645 by the press time.

In a case where the GBP/USD pair breaks the 1.2645 support, the early June swing high of near 1.2545 will precede a 3.5-month-old ascending support line, close to 1.2475, to please the bears before directing them to the January 2023 peak of near 1.2450.

On the contrary, GBP/USD recovery needs to cross the latest monthly peak of around 1.2850 to aim for the early April 2022 low of near 1.2975-80.

Following that, the 1.3000 psychological magnet may act as an extra check for the Pound Sterling bulls before giving them control.

GBP/USD: Daily chart

Trend: Further downside expected