GBP/USD: Cautiously bullish, eyes UK CPI

• The decline from 1.4377 (2018 highs) is a cause for concern for the bulls.
• Still, the outlook remains bullish as long as the pair holds above the ascending 10-day moving average.
• A weaker-than-expected UK CPI could pour cold water over rate hike optimism.

The GBP/USD's reversal from 1.4377 (2018 highs) to 1.4285 yesterday could be a sign of bullish exhaustion.

Still, the outlook remains bullish as the momentum studies retain the bullish bias: 5,10 and 21-day MAs trend north, indicating bullish setup. Moreover, reduced Brexit fears and May rate hike optimism are seen keeping GBP better bid in the short-run.

That said, the bears may come in strong if the UK March CPI, due at 08:30 GMT, inflation prints below estimates. Moreover, a big drop in inflation could see investors scale back expectations of Bank of England (BOE) tightening.

The annualized CPI is expected to come in at 2.7%, unchanged from February when it fell from 3.0% in January. Meanwhile, core inflation, which strips the consumer basket of food and energy prices, is expected to remain steady rising 2.4 percent over the year in March.

GBP/USD Technical Levels

As of writing, the GBP/USD pair is trading just below the 50-hour moving average (MA) of 1.4310.A move above 1.4338 (resistance on 1H chart) would expose resistance lined up at 1.43454 (resistance on 1H) and 1.4377 (32018 high).

On the downside, acceptance below 1.4283 (April 17 low on 1H) could yield a drop to 1.4245 (March 26 high). A violation there would allow a drop to 10-day MA located at 1.4195.