GBP/USD: Range-play to continue near 1.2900 ahead of US data?

The GBP/USD pair stalled its recovery from post-BOE lows reached at 1.2847, as the bears seem queued up at 1.29 handle.

GBP/USD capped amid risk-off

The major is seen fluctuating between gains and losses so far this session, stuck in a 25-pips narrow, as a dovish BOE decision and persisting  risk-off trades keep a lid on the prices. The BOE was a mixed bag, with the decision seen as dovish amid inflation reaching its target by 2017-end, which may prevent the BOE from rate hikes.

BoE: Interest rates and asset purchases to remain unchanged – Deutsche Bank

Moreover, recent broad based US dollar strength, in the wake of upbeat PPI and unemployment claims data, also led to the stalled upside in the spot. Meanwhile, the Asian stocks drop, tracking Wall Street lower, and hence, add to the risk-off market environment, weighing down on the risk currency GBP.

However, cable may find fresh support if the correction in the US dollar extends further into Europe, as treasury yields accelerate to the downside amid reduced appetite for risky assets. Although the upside may remain capped ahead of the US CPI and retail sales release due later in the NA session.

US CPI preview: decline in core CPI March transitory - Nomura

GBP/USD Levels to consider            

A break above 1.2961 (May 9 high) could lift the pair above 1.2990 (7-week high), beyond which a test of 1.3025 (classic R3) is imminent. Conversely, a break below 1.2876 (daily low), leading to a subsequent break below 1.2837/29 (classic S1/ Fib S2 & May 4 low) is likely to drag the pair towards testing its next support near 1.2800 (key support).