• The GBP/USD is trading around the 1.39 level, in a narrower range after reaching a high of 1.3924.
• The better than expected UK CPI report supports the pair, but the moves are limited ahead of the highly anticipated US inflation report tomorrow.
• The technical picture is mixed.

The GBP/USD is trading in a narrower range in the American session. US stock markets are stable and provide no new guidance. Earlier, the pair advanced to higher ground from the lows of 1.3832, reaching a high of 1.3924.

The British pound was supported by a high inflation read. The Consumer Price Index remained at an annual level of 3% in January, above a drop to 2.9% that was forecast. Core CPI advanced to 2.7%, also beating expectations. The Bank of England had already raised its inflation forecasts last week, thus limiting the impact of the surprise on the currency. 

The next big event for markets is the release of the US inflation and retail sales reports tomorrow at 13:30 GMT. Core CPI is projected to remain unchanged at 1.8% y/y. See the full preview here.

GBP/USD technical picture is mixed

The RSI has advanced to just above 50, providing a bullish sign. On the other hand, momentum is gathering to the downside. The pair is trading above both the 50-day SMA and the 200-day SMA. 

On the upside, 1.40 worked as resistance and is also a round number. The post-BOE high of 1.4060 is the next notable cap on the pair. The 1.4140 level worked in both directions. The last line on the topside is 1.4340 that was the highest level since 2016.

On the downside, 1.3765 was the swing low last week. Further below, 1.3610 capped the pair in early January. Back then, support was at 1.3460.