GBP/USD remains well supported above the 1.2700 area ,US Dollar strengthens

• GBP/USD holds above the 1.2700 area amid a firmer Dollar.
• The UK Consumer Price Index (CPI) came in stronger than expected.
• FOMC Minutes stated inflation remained unacceptably high, additional tightening of monetary policy may be required.
• Investors will keep an eye on the US Initial Jobless Claims, the Philadelphia Fed Manufacturing Survey, the UK Retail Sales.

The GBP/USD pair struggles to gain and remains well-supported above 1.2700 during the early Asian session on Thursday. The odds for a further tightening cycle from the Federal Reserve (Fed) boost the US Dollar Index above 103.50, the highest level since June. The major pair currently trades near 1.2717, losing 0.12% on the day.

On Wednesday, the UK’s National Statistics reported that the nation's Consumer Price Index (CPI) MoM came in at -0.4%, above the market consensus of -0.5% versus the previous reading of 0.1%. On a yearly basis, British CPI inflation rose 6.8% for June, as expected of 6.8%. The core CPI, which excludes volatile oil and food prices for July, increased 6.9%, better than the 6.8% estimation. Meanwhile, the UK Retail Price Index (RPI) for July came in at -0.6% MoM and 9.0% YoY. The stronger-than-expected data from the UK might convince the Bank of England (BoE) to raise an additional rate.

Across the pond, the hawkish statement from FOMC Minutes and the upbeat US data lift the US Dollar broardly, That said, the Federal Open Market Committee (FOMC) Minutes stated that inflation remained unacceptably high. The Fed official saw significant inflationary risks, and it may need additional tightening of monetary policy to bring inflation to the longer-run target.

About the data, US Industrial Production increased 1.0% in July, beating market expectations of 0.3% and a prior decrease of 0.8%. In July, Building Permits increased from 1.44 million to 1.44 million, while Housing Starts increased from 1.39 million in June to 1.45 million, exceeding expectations of 1.48 million. Both the Change in Building Permits and the Change in Housing Starts exceeded both market expectations and prior readings. This, in turn, boosts the Greenback and acts as a headwind for the GBP/USD pair.

Looking ahead, market players will monitor the US weekly Initial Jobless Claims for the week ending August 11 and the Philadelphia Fed Manufacturing Survey for August, due later in the American session. The focus will shift to UK Retail Sales for July, due on Friday. The monthly figure is expected to drop 0.5%.