GBP/USD refreshes daily high, lacks follow-through beyond 1.2100 ahead of the US CPI

• GBP/USD gains some positive traction on Wednesday amid subdued USD price action.
• Recession fears, the BoE’s gloomy outlook could act as a headwind and cap the major.
• Traders might also prefer to move on the sidelines ahead of the crucial US CPI report.

The GBP/USD pair edges higher during the first half of the European session on Wednesday and climbs to the 1.2100 neighbourhood or a fresh daily high in the last hour.

The uncertainty over the Fed's rate hike path keeps the USD bulls on the defensive, which, in turn, offers some support to the GBP/USD pair. The New York Fed’s Survey of Consumer Expectations on Monday showed that the inflation outlook fell sharply in July. This might have pushed back speculations for a more aggressive policy tightening by the Fed. The markets, however, are still pricing in around 70% chances for a 75 bps rate hike move at the September FOMC meeting.

Hence, the market focus would remain glued to the latest US consumer inflation figures, due for release later during the early North American session. The crucial US CPI report would be looked upon for fresh clues about the Fed's near-term policy outlook, which will play a key role in influencing the USD price dynamics. In the meantime, the prevalent cautious market mood - amid growing recession fears - could lend support to the safe-haven buck. This, along with the Bank of England's gloomy outlook, should cap the GBP/USD pair.

Even from a technical perspective, the emergence of fresh selling near the 1.2130-1.2140 region since the beginning of this week warrants caution for bullish traders. This further makes it prudent to wait for strong follow-through buying before positioning for any further intraday appreciating move amid absent relevant market-moving economic data from the UK.

Technical levels to watch