GBP/USD Holds Above 1.3400 Despite Softer UK Inflation

The British Pound remained resilient on Wednesday, with GBP/USD holding near 1.3400 despite UK inflation coming in slightly below expectations.

The UK's annual Consumer Price Index (CPI) eased to 2.6% in June, missing the market forecast of 2.7%. While the softer reading reinforced expectations that inflation is gradually cooling, it failed to trigger a fresh selloff in the pound.

The pair continues to find support after breaking above a downtrend line drawn from the May highs. However, gains remain capped as investors continue to favour the US Dollar amid ongoing geopolitical tensions in the Middle East.

Safe-haven demand for the greenback, together with higher US Treasury yields, could limit further upside in the near term.

From a technical perspective, GBP/USD is attempting to extend its recovery.

The pair is trading just below the 200-day SMA at 1.3397, which remains the key resistance level. A sustained break above this area could pave the way for a move toward 1.3455, where the June and July highs converge.

Meanwhile, the RSI remains slightly above 50 and the MACD stays in positive territory, suggesting bullish momentum is gradually improving.

On the downside, 1.3330 is the first support level to watch, followed by 1.3290 and 1.3270 if selling pressure returns.

For now, GBP/USD remains in recovery mode, but a decisive move above the 200-day SMA will likely be needed to confirm a stronger bullish breakout.