GBP/USD dives back below 1.3200, focus shifts to US housing data

The GBP/USD pair failed to extract any benefit from better-than-expected UK inflation reading and is extending its weakness further below 1.3200 handle to currently trade near session low level at 1.3170.

The pair did bounce back above 1.3200 handle after the release of UK CPI report for June that showed inflation ticked higher to 0.5% on a yearly basis. The reading was higher as compared to 0.4% expected and 0.3% recorded in May. Meanwhile on a monthly basis, CPI remained unchanged at 0.2% and was in-line with consensus estimates.

The pair, however, lost upside momentum as expectations of further monetary easing by BOE at its meeting in August continues to weigh on the British Pound and is seen restricting any swift recovery for the GBP/USD major. 

Next on the tap would be the US housing data, which if surprises on the upside could further aggravate the bearish sentiment surrounding the GBP/USD major.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "Technically, the pair maintains a neutral-to-bearish tone in its 4 hours chart, as the price is well below a flat 20 SMA, whilst the technical indicators maintain their bearish slopes within negative territory."

"The pair has an immediate support in the 1.3170/80 region, and a downward acceleration through the level is required to confirm further slides, with 1.3130 and 1.3080 as the next intraday supports. Above 1.3250, the pair can rally up to 1.3320, the 23.6% retracement of the latest daily slump, and where selling interest will likely resurge."