GBP/USD holds above 1.2900 as traders brace of US CPI data

• Trump warns of economic turbulence due to ongoing "period of transition."
• US recession fears rise, fueling bets for 80 bps of Fed rate cuts in 2025.
• DXY weakens to 103.76 as investors shift to safe-haven currencies.
• Traders eye US CPI on Wednesday and UK GDP figures on Friday for direction.

The Pound Sterling consolidates within familiar levels against the US Dollar amid a scarce economic docket on Monday. Key US inflation data and the UK's Gross Domestic Product (GDP) figures are due later in the week. The GBP/USD trades at 1.2915, up 0.04%.

Sterling steady amid US inflation concerns and UK GDP anticipation

Sentiment remains dismal due to concerns about US President Donald Trump's trade policies. On Friday he said that his policies could lead to economic turbulence in the short term due to an undergoing "period of transition" because of what he's doing is very "big."

In the meantime, fears that the US economy could be tipped into a recession or, worse, a stagflationary scenario keep investors leaning into safe-have currencies like the Swiss Franc and the Japanese Yen. Consequently, expectations that the Federal Reserve (Fed) would ease policy had risen, with market participants estimating 80 basis points of easing towards year-end, revealed data from the Chicago Board of Trade (CBOT).

Meanwhile, the Greenback extended its losses, with the US Dollar Index (DXY), which tracks the performance of the buck against a basket of six other currencies, down 0.14% at 103.76.

The New York Fed Consumer Sentiment Survey revealed that inflation expectations for one year in February increased from 3% to 3.1%. For the three--and five-year periods, they remained unchanged at 3%. Americans expect price increases in gas, rent, and food.

This week, the US economic docket will feature the JOLTs Job Opening on Tuesday, followed by the release of the Consumer Price Index (CPI) on Wednesday. Across the pond, GBP/USD traders will eye GDP figures on Friday.

GBP/USD Price Forecast: Technical outlook

The GBP/USD trades sideways for the second straight day, unable to crack the 1.2950 figure decisively. The price action suggests that the pair is poised to edge higher. Nevertheless, the Relative Strength Index (RSI) indicates that the pair is overbought, and an appreciation of the US Dollar could drive the GBP/USD to challenge the 200-day Simple Moving Average (SMA) at 1.2788.

Conversely, if GBP/USD climbs past 1.2950, expect a test of the 1.3000 mark.