Key events today:

06:00 UTC: GBP – Consumer Price Index.

12:30 UTC: USD – Consumer Price Index.

The GBP/USD pair attracts some sellers during the Asian session on Wednesday but lacks strong support and remains within the broader trading range of the previous day. Spot prices are currently hovering around the 1.2200 level, down 0.20% for the day, as investors eagerly await crucial Consumer Price Index (CPI) data from the UK and the US before positioning for the next directional move.

The pivotal CPI report will influence interest rate forecasts for the Bank of England (BoE) and the Federal Reserve (Fed), which in turn will play a key role in determining the next directional phase for GBP/USD. Ahead of the key data release, stagflation risks — a combination of high inflation and weak economic growth — and concerns over the UK’s fiscal situation weigh on the British Pound (GBP).

Additionally, the recent spike in borrowing costs in the UK worsens sentiment around the GBP and is a key factor pressuring the GBP/USD pair. The US Dollar (USD), meanwhile, hovers near a weekly low following Tuesday’s softer US Producer Price Index, which helps limit the decline in spot prices. However, the Fed’s “hawkish” stance serves as a tailwind for the dollar.

Recommendations: Primarily trade Sell orders from the current price level.