GBP/USD holds steady above mid-1.2200s, moves little post-UK CPI

• GBP/USD was seen consolidating this week’s recovery move from multi-week lows.
• A slight disappointment from the latest UK CPI figures failed to provide any impetus.
• The prevalent risk-on mood undermined the safe-haven USD and remained supportive.

The GBP/USD pair extended its sideways consolidative price action and had a rather muted reaction the latest UK CPI report. The pair held steady above mid-1.2200s and was seen consolidating its recovery gains of over 200 pips recorded over the past two trading sessions.

Having dropped to multi-week lows at the beginning of this week, the pair staged a solid rebound and was being supported by sustained US dollar selling bias. The momentum stalled near 50-day SMA amid fading optimism over encouraging data on COVID-19 vaccine trial.

It is worth recalling that the US drugmaker Moderna had reported positive results for its coronavirus vaccine on Monday. However, reports on Tuesday indicated that Moderna had provided insufficient data, which casted doubts about the efficacy of a potential vaccine.

Meanwhile, the prevalent positive mood around the global equity markets continued weighing on the greenback's perceived safe-haven status and extended some support to the GBP/USD pair. Traders largely shrugged off Wednesday's release of UK consumer inflation figures.

The UK Office for National Statistics (ONS) reported that the headline UK CPI fell 0.2% MoM and eased to 0.8% YoY rate in April, missing consensus estimates pointing to a reading of -0.1% and 0.9%, respectively. Core CPI also fell short of expectations and eased to 1.4% YoY.

With Wednesday's key UK macro data out of the way, the market focus now shifts to the release of the minutes of the latest FOMC meeting. In the meantime, it will be prudent to wait for a sustained strength above 50-day SMA before positioning for any further appreciating move.

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