GBPUSD dips after weak CPI data but remains without clear direction signals

GBPUSD fell to a two-week low on Wednesday following weaker-than-expected UK February inflation data, reinforcing expectations of a Bank of England rate cut in May.

Fresh losses are testing support at 1.2883 (20DMA / last Friday’s low), and a break below this level could deepen the correction from the recent multi-month high at 1.3014. This would expose the next key support at 1.2798 (200DMA / 23.6% Fibonacci retracement of the 1.2099–1.3014 rally).

Negative signals are also emerging on the weekly chart, including overbought conditions and a double weekly Doji with strong upside rejection last week. Additionally, the pair has slipped back into the rising weekly Ichimoku cloud, and a close within the cloud could strengthen bearish signals, alongside the potential monthly bull trap above the 1.2924 Fibonacci resistance.

However, economists remain cautious, expecting inflation to stay persistent. The lower February figures may be seen as a temporary dip rather than a sustained easing of price pressures.

In this scenario, the downside could remain limited, with shallow pullbacks suggesting that bulls still hold control, keeping the pair on track for renewed gains after consolidation.

Res: 1.2952; 1.2989; 1.3000; 1.3042
Sup: 1.2883; 1.2861; 1.2798; 1.2715