GBP/USD bears moving in on 1.3360 sell stops

• GBP/USD scores fresh cycle lows but bulls bite back. 
• Cable has been under pressure due to Brexit and decelerating growth while US CPI underpins the US dollar. 

GBP/USD is printing fresh cycle lows in late North American trade, shaking out some stale longs and making way for further advances to the downside for the sessions ahead. At the time of writing, GBP/USD is trading down some 0.26% after falling from a high of 1.3433 to a low of 1.3359 on the day. However, the bulls have stepped in and cable has snapped back from the lows. 

Cable was printing the lowest level of 2021. A combination of domestic data and political turmoil, coupled with the divergence between the Federal reserve theme to that of the Bank of England weighs towards the end of the week. 

Bets of a BoE rate hike are dwindling

On the domestic front, the British economy is losing steam. Data released by the Office for National Statistics showed Britain's economy grew by 0.6% in September. However, estimates for previous months were revised lower, leaving the economy still smaller than it was in February 2020.

As for the central bank, during the November policy meeting, the Bank of England surprised markets by leaving its main interest rate unchanged at 0.1%. Leading into the event, however, numerous members of the MPC had been advocating for rate hikes, teeing up the market for disappointment. Nevertheless, markets are now pricing in a high probability of a December rate rise. However, the caveat was economic progress and a resole to the Brexit risks, either of which is going in the right direction. 

• Brexit angst is heating-up: GBP traders be warned

Investors are nervous about the negative ramifications that a post-Brexit dispute between Britain and the European Union over trade with Northern Ireland could have for the UK economy. However, in the latest update, Ireland's foreign minister said on Thursday that comments from Britain's Brexit minister suggest there is still some time to find a solution to trading difficulties before Britain seeks to trigger article 16.

US dollar soars to fresh cycle highs

Meanwhile, the greenback has printed the highest level since July 2020 at 95.1410. It is currently up by some by 0.29% in late North American trade and tracks higher following the strongest inflation reading in more than three decades.

On Wednesday, the Consumer Price Index posted its biggest monthly gain in four months to lift the annual increase in inflation to 6.2%, the strongest year-on-year rise since November 1990. CPI is now at new cycle highs and both the yearly and monthly prints show a second straight month of accelerating gains. Consequently, traders are anticipating US interest rate hikes next year which is underpinning the US dollar.