GBP/USD rises above 1.38, UK CPI awaited

• USD weakness pushes the pair higher on Monday.
• Trading action quiets down in the NA session.
• UK CPI-data likely to be the next significant catalyst.

After closing the previous week at its highest level since the sharp drop witnessed in June 2016 following the Brexit vote, the GBP/USD pair stretched higher on Monday with the greenback remaining under a constant selling pressure. As of writing, the pair was trading at 1.3807, adding nearly 80 pips, or 0.6%, on the day.

Although the pair's recent uptrend had been fueled by the USD weakness, tomorrow's macroeconomic data releases from the U.K. could impact the demand for the GBP and shift the market focus away from the greenback. 

"The UK inflation rate is expected to peak in December at a cyclical high of 3.2% y/y as the post-Brexit Sterling’s depreciation, rising oil prices and strong consumer demand just ahead of Christmas holiday feed into the price level in the UK. While the headline inflation is expected to accelerate further requiring the Bank of England Governor Mark Carney to write an explanatory letter to the Chancellor of Exchequer, the core inflation that strips the consumer basket of food and energy prices is expected to remain steady at 1.7% y/y," FXStreet's European Chief Analyst Mario Blascak explained in a recently published article. 

A higher-than-expected reading could ramp up the expectations of the BoE making more rate hikes in 2018 and could allow the GBP to gather strength against its peers. However, with the GBP/USD pair moving closer to the pre-Brexit levels, markets may forecast the impact of the weak GBP on the inflation fading away and the reaction could stay limited.

Technical outlook

On the upside, the pair could face the first technical resistance at 1.3900 (psychological level), 1.3945 (Feb. 29, 2016, high) and 1.4000 (psychological level). On the downside, supports are located at 1.3730 (daily low), 1.3615 (former resistance) and 1.3525 (20-DMA).