GBP/USD spiking on volatility fed by risk aversion, ahead of UK CPI figures

• GBP/USD gathering bids ahead of London marets.
• Volatility still high with UK CPI data in the barrel.

GBP/USD is climbing, touching 1.3869 before retreating back to 1.3860 ahead of the London market open.

The Sterling has suffered at the hands of market sentiment lately, with ongoing Brexit tensions weighing down the Queen's currency as risk aversion plagues markets globally. Today that metric seems to have switched, with the US Dollar taking a bath as renewed fears in markets give the Nikkei a haircut, sending Japan's leading index trading into the red for the day, and market participants piling into the Yen and pulling out of riskier assets, which now seems to include the Greenback.

The UK may experience another GBP-booster today, with CPI figures for the kingdom dropping at 09:30 GMT, bundled with PPIs and Core Output numbers. The real mover that traders will be watching will be the headline year-on-year Consumer Price Index data, with market analysts forecasting a slight contraction for inflation growth, anticipating a reading of 2.9% versus the previous 3.0%. An upside beat to inflation figures could give the Sterling the fuel it needs to begin marching back up the charts against the USD, following two weeks of declines.

GBP/USD Technicals

Intraday levels are stacked up with recent volatility; swing support is priced in at 1.3805 and 1.3778, while resistance will meet the bulls at 1.3875 and 1.3980 above that. Looking long-term, Daily candles show the pair currently trading at the 34 EMA, near 1.3832, while a downside break here could see price moving unchallenged into the major psychological level at 1.3600.