GBP/USD hangs near multi-week lows, below mid-1.3700s post-UK CPI

• GBP/USD was seen oscillating in a narrow trading range on Wednesday.
• A subdued USD price action was seen lending some support to the pair.
• Softer UK CPI print acted as a headwind for the GBP and capped gains.

The GBP/USD pair held steady in the neutral territory, just below mid-1.3700s and had a rather muted reaction to the UK inflation report.

The pair seesawed between tepid gains/minor losses through the early part of the trading action on Wednesday and consolidated the previous day's sharp fall to the lowest level since July 23. Signs of stability in the equity markets held investors from placing fresh bullish bets around the safe-haven US dollar, which, in turn, extended some support to the GBP/USD pair. However, a combination of factors continued acting as a headwind for the British pound and kept a lid on any meaningful upside for the major.

The UK Office for National Statistics (ONS) released the latest UK consumer inflation figures, which showed that the headline CPI rose 2% YoY in July. This marked a notable deceleration from the 2.5% recorded in June and also missed market expectations for a reading of 2.2%. This comes on the back of worries that job losses in the UK will rise after the furlough scheme ends in September, which, in turn, undermined the sterling. That said, the downside remains cushioned as the focus remains on the FOMC meeting minutes.

The incoming US economic data, including Tuesday's weaker Retail Sales figures, indicated that the US consumer has grown more cautious in response to the latest surge in COVID-19 cases. This might have forced investors to further scale back their expectations about an early policy tightening by the Fed. Hence, investors will closely scrutinize the minutes for clues about the likely timing of the Fed's tapering move.

This, along with developments surrounding the coronavirus saga, will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the GBP/USD pair.

Technical levels to watch