GBP/USD trades with negative bias below mid-1.2900s, downside seems limited ahead of US CPI

• GBP/USD retreats from a multi-month top amid some repositioning ahead of the US CPI.
• Bets that the Fed will cut rates further amid recession fears should cap any USD recovery.
• Expectations for a slow BoE rate-cutting cycle could underpin the GBP and support the pair.

The GBP/USD pair edges lower during the Asian session on Wednesday and erodes a part of the previous day's strong move up to over a four-month peak, around the 1.2965 area. Spot prices currently trade around the 1.2935 region, though the downtick lacks bearish conviction as traders keenly await the release of the US consumer inflation figures before placing fresh directional bets. 

The US Consumer Price Index (CPI) report will play a key role in influencing market expectations about the Federal Reserve's (Fed) rate-cut path, which, in turn, will drive the US Dollar (USD) demand and provide a fresh impetus to the GBP/USD pair. In the meantime, some repositioning trade ahead of the crucial data assists the buck to recover a part of the previous day's slide to its lowest level since mid-October and acts as a headwind for the currency pair. 

Any meaningful USD appreciation, however, seems elusive in the wake of growing acceptance that the Federal Reserve (Fed) will cut interest rates several times this year amid worries about a tariff-driven slowdown in the US economic activity. Apart from this, expectations that the Bank of England (BoE) will cut rates more slowly than other central banks, including the Fed, might underpin the British Pound (GBP) and lend support to the GBP/USD pair. 

Even from a technical perspective, last week's sustained breakout above the very important 200-day Simple Moving Average (SMA) was seen as a key trigger for bulls and suggests that the path of least resistance for the currency pair is to the upside. Hence, any further corrective slide might still be seen as a buying opportunity and is more likely to remain limited.