GBP/USD fades a spike to 1.2540, focus shifts to UK CPI

The GBP/USD pair drops back towards 1.25 handle following a freak spike to daily highs at 1.2540, as the risk-on flows in the London stocks lose steam amid a pick-up in buying interest around the alternative higher yielding asset, the US treasury yields. The UK’s FTSE trades neutral around 7,260 levels, while treasury yields rally +0.75% to +1.20% across the curve.

However, the spot looks to hold 1.25 handle amid stalled selling in the EUR/GBP cross, as focus shifts towards a fresh batch of fundamental drivers from the UK docket due on the cards tomorrow. The UK offers CPI on Tuesday. UK CPI preview: Inflation expected to accelerate further in Jan - Natixis

GBP/USD Levels to consider            

At, 1.2511, the upside barriers are lined up at 1.2540 (daily top), 1.2572 (Dec 15 low) and 1.2600 (round figure). While supports are aligned at 1.2473 (daily S1) and 1.2413 (100-DMA) and below that at 1.2378 (50-DMA).