GBP/USD: a tug of war ahead of the BoE, 1.3070 or 1.3330 break out point?

Currently, GBP/USD is trading at 1.3215, down -0.51% on the day, having posted a daily high at 1.3330 and low at 1.3204.

Yesterday, GBP/USD was making gains on the back of the UK prices data that continued to overshoot the BoE's 2% target for the month of August. The CPI increased by 2.9% yr/yr, higher than 2.6% in July and beating expectations of  2.8%. 

GBP: Time for the BoE to take charge - ING

However, disappointing wage data earlier today (+2.1% versus +2.3% expected), sent Sterling off a cliff despite the fact that employment trends are still looking strong with job claims that were down 2.8k in the month and unemployment lower at 4.3% to a 42-year low. There was something for hawks and doves in that report but the market speculates that policy makers may be less inclined to favour higher rates while the gap between wage growth and inflation widens.

We have the BoE tomorrow and the focus will be on whether MPC voting member and hawk Haldane will now back his June 21st hawkish signal on the back of the CPI data and join the two hawks, Saunders and McCafferty, to make this week's vote 6-3 instead of the 7-2 vote prior vote. 

GBP/USD levels

Bearish—Sterling has stumbled badly, as analysts at Scotiabank note, who argue that intraday price patterns look weak (bearish outside range session on the 6-hour chart): "We see resistance at 1.3330 now." 

To the downside, analysts at Commerzbank suggested that dips are indicated to hold circa 1.3070/35: "This guards minor support at 1.2986 ahead of the 1.2826 longer term channel," they said.