The GBP/USD price outlook seems to turn to the downside as the technical profit-taking has been seen after a long bull run. Moreover, fundamental factors are also dampening the rally.

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The GBP/USD pair did not respond to September inflation data and is moving sideways towards 1.3800 amid expectations of a Bank of England rate hike before the end of the year.

According to the UK National Statistics Office (ONS), the consumer price index (CPI) y/y ending September was + 3.1%, compared to + 3.2% in August.

In the meantime, core inflation (excluding volatile food and energy) declined 2.9% y/y last month, down from 3.1% in August, below the consensus of 3.0%.

According to monthly data, the UK consumer price index increased by 0.3% in September, beating 0.4% and 0.7% expectations.

A rebound in US Treasury bond yields on Tuesday helped the dollar offset its losses, but its risk-sensitive competitors struggled as risk flows swept through the financial markets. As investors await inflation data from the Eurozone and Canada, market sentiment appears to have turned cautionary early Wednesday. In addition, the Federal Reserve will publish its Beige Book that afternoon (FXB, UUP).  

On Tuesday, the US Census Bureau reported a 1.6% decline in startups and a 7.7% decline in building permits. In line with expectations, the People’s Bank of China (NBK) kept its annual interest rate at 3.85% on Wednesday.

GBP/USD Price Technical Outlook: More Downside Under 1.3800

The GBP/USD price fell below the 1.3800 mark and marked the fresh daily lows at around 1.3770. Technically, the price remains vulnerable to the downside correction after rising for three consecutive trading sessions. However, the volume data shows a slight advantage to the bears while the average daily range is 50% so far. Hence, we will be looking at targets below 1.3770 towards 1.3750 ahead of 1.3720.

On the upside, if the pound gains momentum, the first hurdle will still be the 1.3810 level ahead of yesterday’s highs around the 1.3835 area.