GBP/USD corrects to 1.29 after finding support at 1.2880

The GBP/USD eased to its daily low at 1.2880 in the NA session as the greenback continued to retrace its losses against its rivals. However, the pair was able to correct some its losses and moved back into the positive territory ahead of tomorrow's important inflation data to be released from the United Kingdom. At the moment, the pair is trading at 1.2897, up 0.06%, or 8 pips, on the day.

After dropping to its session low at 98.67, the US Dollar Index inched higher in the US afternoon as the rising U.S. Treasury bond yields helped the greenback find some demand. As of writing, the index was moving in a tight range around 98.80, losing 0.25%.

• US Dollar consolidates losses around 98.80

Tomorrow, the consumer price index data from the U.K. will be looked upon for fresh impetus. The markets expect the inflation in the U.K. to rise to 2.6% in April from 2.3% in March on a yearly basis. If the data suggests that the price pressure continues to increase, the GBP could catch a buying wave amid rising speculations of a tightening move by the Bank of England. However, considering how the BoE Governor Carney in his latest press conference last week said that the current monetary policy was appropriate, the market could show a limited reaction to tomorrow's data. 

• Carney's optimism on UK wage growth challenged by new report - BBG
• No changes in the BoE for the next 12-months – Danske Bank

Technical outlook

A sustained drop below 1.29 (psychological level) could allow the fall to extend to 1.2845 (May 12 low) ahead of 1.2770 (Apr. 24 low). On the upside, resistances could be seen at 1.2965 (Apr. 28 high), 1.3000 (psychological level) and 1.3060 (Sept. 28 high).