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The GBP/USD is surprisingly resilient this week, climbing on thin volumes for Monday and hanging onto gains heading through Tuesday's early trading session, and the pair is trying to hold territory above 1.3900 as confidence begins to return to the Sterling on the back of renewed confidence after weeks of Brexit toe-dragging has capped off potential gains in the GBP with the UK Budget Report looming ahead in the Tuesday London session.

The Greenback has been hobbled by constrained wage growth figures that were buried in the jobs report last Friday, leading to a two-way reaction in broad markets that saw equities and bond yields lift on the 313k jobs added to the American landscape, but a lack of wage growth implies that inflation expectations may be misplaced with more slack in the US employment scenario than previously anticipated, and the US Dollar has been drifting as a result. The US CPI figures will be dropping at 12:30 GMT today, and a clearer read of US inflation will be expected, with the headline year-on-year CPI forecast at 2.2%, a slight uptick from the previous 2.1%. A beat for the CPI could send the US Dollar driving higher, but a miss could imply that structural inflation for the US may not be as close at hand as many market participants are expecting.

Before US inflation the UK will be posting their Budget Report for the next fiscal year which will include updated growth and inflation forecasts for the kingdom. The Budget Report drops at 11:30 GMT and positive revisions to the UK government's budget forecasts could go a long way to adding to the boost the Sterling is receiving on the back of recent revelations that a post-Brexit deal may be struck between the European Union (EU) and the UK. An EU summit scheduled for March 22nd through the 24th is expected to yield further details.

GBP/USD Technicals

The pair is still holding in bullish territory well above the 200-day SMA, and H4 candles show growing bullish potential off of higher lows over the last two weeks, now acting as support from the swing lows at 1.3780 and 1.3710. Resistance is priced in from last week's high coinciding with the 50.0 Fibo level at 1.3930, with late February's swing high of 1.4070 providing further resistance above.

source: fxstreet