GBP/USD is once again threatening a push toward trend highs above 1.35. The pound has maintained a bullish tone in recent sessions, although it has yet to secure a sustained break higher.

Cable's recent climb reflects a broadly softer dollar rather than a distinctly sterling-positive story. The move has been aided by Fed commentary following the recent dovish hold, as well as softer U.S. data, which have tempered expectations for further hawkish Fed policy and lent support to the pound. That narrative faces a key test with Wednesday's U.S. CPI release, which should offer fresh clues on the inflation outlook. While inflation has eased recently, it remains well above the Fed's 2% target.

Looking at the broader picture, the ongoing conflict in the Middle East and volatility in oil prices may complicate the inflation outlook. Brent crude has traded between $72 and $110 per barrel since May, suggesting the outlook is unlikely to shift dramatically with Wednesday's data. Current consensus forecasts anticipate annual CPI inflation of 3.4% in July, a slight easing from 3.5% previously.

On the technical front, GBP/USD faces immediate resistance at Friday's high of 1.3509, followed by the July 15 high of 1.3556. On the downside, the rising 10-day moving average at 1.3441 offers initial support, with stronger support found in the 1.3406 to 1.3400 range, which includes the flat 200-DMA and key psychological levels. Traders will be closely watching these levels as the market reacts to upcoming economic data.
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(Paul Spirgel is a Reuters market analyst. The views expressed are his own)