GBP/USD extends into a third day of declines ahead of UK CPI print

• GBP/USD fell back below 1.3400 on Tuesday, accelerating a three-day bear slide.
• A key technical turnaround has sent Cable bids into an accelerated backslide.
• Key UK CPI inflation indicators due on Wednesday, followed US CPI on Friday.

GBP/USD stepped into a third straight bearish session on Tuesday, shedding weight and slipping back below the 1.3400 handle. Pound Sterling (GBP) traders are pulling back from their bids ahead of the latest round of Consumer Price Index (CPI) inflation data due from the UK on Wednesday, with the US side of the CPI data docket due on Friday.

Headline UK CPI inflation is expected to rose to 4.0% YoY in September, while core CPI is forecast to tick up to 3.7%. With UK inflation pressures still on the rise, the Bank of England's (BoE) room to maneuver in the face of a steepening recessionary outlook is severely restricted.

US markets are facing less of the same problem, but could simply be less along the same spiral. US CPI inflation data due on Friday is expected to show a comparative increase in price pressures, with headline annualized CPI expected to rise to 3.1% from 2.9%. While US CPI moves are expected to match UK inflation changes, the figures remain low enough that the Federal Reserve (Fed) is still well on its way to delivering at least two more interest rate cuts before the end of the year.

GBP/USD price forecast

The GBP/USD daily chart shows the British pound trading around 1.3360, with recent price action suggesting a period of consolidation after a series of lower highs and higher lows. The pair remains caught between its 50-day Exponential Moving Average (EMA) near 1.3440 and the 200-day EMA around 1.3290, a range that reflects indecision among traders.

The Relative Strength Index (RSI) is currently hovering near 44, which indicates that momentum is leaning slightly bearish but not yet in oversold territory. This suggests sellers have an edge, though conviction remains moderate.

Price action has respected the 200-day EMA several times, showing it continues to act as a key dynamic support level. Meanwhile, rallies toward the 50-day EMA have struggled to gain traction, highlighting the importance of that level as near-term resistance.

Until the pair breaks decisively above 1.3450 or below 1.3290, GBP/USD is likely to remain range-bound. A close under the 200-day EMA could open the door toward the next key support around 1.3140, while a push above the 50-day EMA would bring the 1.3780 area back into view.

GBP/USD daily chart