GBP/USD trading on the backfoot ahead of UK CPI figures

• Sterling on a weak note heading into UK CPI figures.
• Sidelined GBP bulls are looking for a much-needed positive deviation to inflation.

The GBP/USD is trading on the low side, testing close to the 1.3400 level after continuing to slump in the Asia session.

Wednesday brings a smattering of UK data, all dropping at 08:30 GMT, but the headliner for today is UK CPI figures. Economic growth has been a cruel mistress to the UK lately, and the Bank of England (BoE) was recently forced out of a widely-anticipated rate hike in May. Slumping economic data for the UK extended far worse than the hawkish BoE was ready for, and the Sterling has been punished heavily in the FX markets following the BoE's dovish turn.

UK CPI to remain at 2.5% y/y in April - Nomura

As noted by FXStreet's Yohay Elam, "The fall of annual inflation to 2.5% in March was one of the events that weighed heavily on the Pound as it lowers the chance of a rate hike. A repeat of the same level is expected for April and any deviation is likely to shake the pair."

GBP/USD levels to watch

As noted by FXStreet Chief Analyst Valeria Bednarik, "technically, the 4 hours chart shows that a bearish 20 SMA keeps containing advances, now at around 1.3450, while technical indicators remain within bearish territory, the RSI lacking directional strength at 42 and the Momentum advancing modestly, all of which maintains the risk leaned to the downside."

Support levels:  1.3390 1.3355 1.3320

Resistance levels: 1.3450 1.3490 1.3520