• GBP/USD gained traction and climbed above 1.2750 after UK data.
• The pair could face next strong resistance at 1.2770.
• Investors will keep a close eye on US bank stocks.

GBP/USD turned north and climbed to a fresh six-day high above 1.2760 in the European morning on Wednesday. The near-term technical outlook points to a buildup of bullish momentum.

Following strong wage inflation readings on Tuesday, the data from the UK revealed on Wednesday that core consumer inflation remained stick in July. Hawkish Bank of England (BoE) bets gained traction and provided a boost to Pound Sterling midweek.

The Consumer Price Index (CPI) declined to 6.8% on a yearly basis from 7.9% in June but the Core CPI held steady at 6.9%. According to Reuters, markets are fully pricing in a 25 basis points (bps) rate hike in September and see the BoE raising the policy rate by a total of 75 bps by February 2024 after the latest jobs report and inflation data.

In the late American session, the Federal Reserve will release the minutes of the July policy meeting. Investors are likely to ignore this publication and pay close attention to the action in Wall Street.

Fitch Ratings analyst told CNBC on Tuesday that the agency could downgrade several big lenders, including JPMorgan. This headline didn't allow the US Dollar (USD) to gather strength despite the upbeat Retail Sales data. In case bank stocks continue to push lower after the opening bell, the USD could come under renewed selling pressure and allow GBP/USD to stretch higher.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart climbed to 60 and GBP/USD broke above the descending regression channel coming from mid-July, reflecting the bullish tilt in the short-term outlook.

On the upside, 1.2770 (100-period Simple Moving Average (SMA), Fibonacci 23.6% retracement of the latest downtrend) aligns as immediate resistance. If GBP/USD manages to clear that hurdle and starts using it as support, 1.2800 (psychological level) could act as interim resistance ahead of 1.2830 (200-period SMA, Fibonacci 38.2% retracement).

Looking south, first support is located at 1.2725 (50-period SMA) before 1.2700 (psychological level, upper limit of the descending channel). A 4-hour close below the latter could attract sellers and cause GBP/USD to decline toward 1.2650 (static level, mid-point of the descending channel).