GBP/USD hourly chart
The pair was trading around 1.3160 prior to the UK CPI report here. But it is trading to fresh session highs of 1.3205 currently. Looking at the near-term chart above, it’s still not indicative of much. Buyers are in near-term control but there is some daily resistance around 1.3200 with the August high at 1.3266 limiting further upside as well.
For trading today, the pound side of the equation has been filled. It’s now down to the dollar side of the equation and that will rely on the Fed.
In the meantime, I wouldn’t expect cable to run away with gains all too much. That being said, traders have just pared back odds for a rate cut tomorrow down from ~37% previously to ~26% now. Given that argument, there might be scope for the pound to gain a little more as the BOE does look poised to keep rates unchanged on Thursday.
As for the levels to watch in case that upside extends, it will be the ones highlighted above – at least for the time being. That until we get the dollar side of the equation to sort itself out later.