GBP/USD struggled to sustain gains on Wednesday, as heightened geopolitical tensions overshadowed the UK CPI surprise. Reports of Ukraine firing UK missiles into Russia triggered a fresh wave of selling, sending the pair toward key support at 1.26. While sterling showed relative strength against the euro, its performance against the dollar was weighed down by safe-haven flows. The inflation data, particularly services CPI meeting BoE projections, had little impact on policy expectations, leaving the focus squarely on external factors. This reinforces the perception that the Bank of England remains on a measured path toward rate cuts.

Technically, the 1.26 level acts as a critical support zone for GBP/USD, with a decisive break below exposing downside risks toward 1.25. Resistance levels are evident at 1.27 and 1.2740 (the 200-hour moving average), which served as a cap during the CPI-driven spike. The pair's inability to maintain upward momentum suggests that dollar strength and geopolitical uncertainty are overshadowing sterling-specific drivers, keeping the outlook cautious.

For the near term, GBP/USD is expected to trade within its current range, with price action dictated by geopolitical headlines and broader dollar moves. A sustained break below 1.26 could lead to more pronounced losses, while easing geopolitical tensions might enable a recovery toward 1.27. Traders will also keep an eye on upcoming U.S. data and risk sentiment, which could further influence cable’s trajectory.