• GBP/USD is feeling the pull of gravity below 1.1300 after hot UK inflation.
• Risk-off flows seep back in on growth fears and revive the dollar demand.
• Cable eyes 21DMA after facing rejection at the rising trendline resistance.

GBP/USD is off the two-day low at 1.1245 but remains under intense selling pressure below 1.1300 in the European session this Wednesday. Bears are taking a breather before kicking off the next leg lower.

Despite the hotter-than-expected UK annualized Consumer Price Index (CPI), markets are pricing a less aggressive BOE rate hike after the government’s fiscal U-turn and ongoing political instability. This is weighing heavily on the sterling amid fears of a looming recession.

On the other side, investors have turned cautious, reviving the safe-haven demand for the US dollar across the board. The upswing in the US Treasury yields is also boding well for the greenback at the pound’s expense.

The focus now shifts towards the US housing data, Fedspeak and the Beige Book for fresh trading impetus. The US earnings reports will also have a significant impact on the risk-sensitive cable.

From a short-term technical perspective, GBP/USD faced rejection once again at the falling trendline resistance, now at 1.1360.

The sell-off is, therefore, likely to extend towards the bearish 21-Daily Moving Average (DMA) at 1.1140 should Monday’s low at 1.1171 give way.

The 14-day Relative Strength Index (RSI) is lurking just beneath the midline, suggesting that the tide has changed against bulls.

GBP/USD: Daily chart

On the upside, acceptance above the aforesaid resistance at 1.1357 is critical for any recovery to kick in.

The next stop for bulls is seen at the 1.1400 round figure, above which the descending 50DMA at 1.1466 could be challenged.

GBP/USD: Additional technical levels