GBP/USD remains under downward pressure near the 1.2720 region on Tuesday, driven by continued buying interest in the Greenback ahead of Wednesday's US CPI release.
In case GBP/USD flips 1.2750 (Fibonacci 50% retracement of the latest downtrend) into resistance, buyers could be discouraged. In this scenario, 1.2700 (Fibonacci 38.2% retracement) could be seen as next support before 1.2660 (100-period SMA).
If GBP/USD stabilizes above 1.2750 and continues to use that level as support, the 200-period Simple Moving Average (SMA) at 1.2770 could act as next resistance before 1.2800 (Fibonacci 61.8% retracement).
Fundamental Overview
GBP/USD rose to 1.2800 on Monday but failed to clear that hurdle for the second consecutive trading day. The pair stays in a consolidation phase at around 1.2750 early Tuesday.
The negative shift seen in risk mood helped the US Dollar (USD) hold its ground in the second half of the day on Monday and caused GBP/USD to erase its daily gains. Wall Street's main indexes started the week on a bearish note and lost between 0.5% and 0.8% on a daily basis. Early Tuesday, US stock index futures trade mixed.
In the early American session on Tuesday, the US Bureau of Labor Statistics (BLS) will publish a revision to the third-quarter Unit Labor Costs. Markets expect the data to be reaffirmed at 1.9%. In case the BLS revises this figure higher, the immediate market reaction could be USD-positive and weigh on GBP/USD. On the flip side, a negative revision is likely to have the opposite effect on the pair's action.
Nevertheless, investors could opt to wait for Wednesday's November Consumer Price Index (CPI) data from the US before taking large positions. Until then, the risk perception could impact the USD's valuation. If US stocks continue to push lower after the opening bell, the USD could preserve its strength and make it difficult for GBP/USD to attract bulls.
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