GBP/USD erases gains towards 1.29

The GBP/USD pair started to erase its daily gains towards the 1.29 handle as the selling pressure on the greenback eased following the initial drop witnessed in the first trading hours of the NA session. At the moment, the pair is trading at 1.2910, up 0.15% on the day.

Pressured by the weak data, the US Dollar Index fell to its session low at 98.67 at the American opening but it didn't take long for the index to find support and start consolidating its losses. As of writing, the index was at 98.80, losing 0.25% on the day.

On the other hand, the major equity indexes in the United States are showing a solid performance on Monday amid rising crude oil prices, helping the pair stay afloat in the positive area. There are no more data left in the U.S. session and it's unlikely to see sharp fluctuations in the short-term. Tomorrow's economic calendar features consumer inflation figures from the U.K. The expectations are for the CPI to rise to 2.6% from 2.3% on a yearly basis in April. If the inflation continues to rise as expected, the markets could assess that as a development that could force the BoE to start tightening its monetary policy, allowing the cable to gather strength against its rivals.

Technical outlook

With a clean break below 1.29 (psychological level), the pair could aim for 1.2845 (May 12 low) and 1.2770 (Apr. 24 low). To the upside, technical resistances align at 1.2965 (Apr. 28 high), 1.3000 (psychological level) and 1.3060 (Sept. 28 high). 

• GBP: Structural moderation - HSBC
• GBP/USD probable top at 1.2940 – Commerzbank