GBP/USD remained rangebound on Tuesday, with the pair trading near flat in the NorAm afternoon at 1.2747 as traders awaited critical inflation data and central bank meetings. U.S. CPI data on Wednesday is expected to show a slight rise in headline inflation, while core inflation is anticipated to remain steady above the Fed’s 2% target. SOFR futures currently assign an 80% probability of a 25bps Fed rate cut on December 18. In contrast, the BoE is forecasted to keep rates unchanged on December 19, assuming UK CPI aligns with October levels. Sterling’s resilience, bolstered by a 2.3% rebound from November lows, reflects its relative yield advantage and insulation from U.S. tariff risks.

From a technical perspective, GBP/USD’s bullish outlook hinges on breaking above the 200-day moving average at 1.2822. Immediate resistance lies at 1.2766, with further barriers at 1.2874 and the critical 50% Fibonacci retracement at 1.2955. A breach of 1.2955 would put the 2024 high at 1.3434 into focus. On the downside, key support levels include Tuesday’s low at 1.2725, the rising 10-day moving average at 1.2714, and the 38.2% Fibonacci retracement at 1.2682. Sterling’s ability to maintain its current range suggests market participants are waiting for a clearer catalyst.

The U.S. CPI report and subsequent central bank guidance will likely dictate GBP/USD’s next directional move. A softer CPI reading could increase expectations for a Fed rate cut, supporting sterling. Conversely, a stronger print may strengthen the dollar, keeping GBP/USD capped below the 200-DMA. Traders will also look to the BoE’s December 19 meeting and its guidance on inflation and growth, which could provide additional impetus for sterling’s medium-term trajectory. For now, range trading remains the dominant theme.