GBP/USD Holds 1.34 Ahead of UK CPI—BoE Hawkish Test

GBP/USD remains resilient near 1.34 as traders await Wednesday’s UK CPI release. The data is framed as the first major test of the Bank of England’s hawkish pivot, which is tied to persistent UK inflation pressures. Technically, 1.34 is a key psychological level repeatedly acting as support and resistance. Analysts point to nearby support around 1.3350–1.3370, while resistance sits at the late-February high near 1.3520. Momentum signals are neutral-to-mixed, with RSI around 55. Markets are pricing a high probability of further BoE tightening: about a 95% chance of a 25bp hike and roughly 40% odds of a larger 50bp move. This stance depends on CPI confirming entrenched inflation, especially core CPI and services inflation. Consensus forecasts call for headline CPI at 4.8% (vs 5.1% prior) and core CPI steady at 4.5%. A hawkish surprise (core CPI > 4.7%) could push GBP/USD through 1.3500–1.3550 and strengthen the case for a potential 50bp hike. An in-line print may keep price action choppy around 1.3400, while a dovish miss (core CPI < 4.3%) risks a break below 1.3350 and a sharp sterling sell-off. The US dollar factor also matters. Stronger Fed expectations from resilient US data can cap GBP/USD gains, making Wednesday’s CPI a key “risk event” for FX and broader risk sentiment.