The GBP/USD advances for the fourth day in a row on Monday, with the sterling gaining upward traction at the start of the week after UK GDP data while the dollar continues to face selling pressure.
At the time of writing, the GBP/USD trades at the 1.2275 area, posting a 0.16% daily gain after reaching a daily high of 1.2298. Meanwhile, the U.S. Dollar Index posts a modest daily loss at 104.85.
The pound was supported by better-than-expected U.K. growth data. The U.K. Office for National Statistics (ONS) revealed that the British economy, measured by the Gross Domestic Product, expanded by 0.5% in October following the 0.6% contraction recorded in September and above the 0.1% decline expected.
Other data suggested that industrial production stagnated during the same period, beating the consensus of a 0.1% fall and posting a yearly contraction of 2.4%, while manufacturing production expanded by 0.7%.
With no first-tier data scheduled in the U.S., investors focus on Tuesday's inflation data and the FOMC's interest rate decision on Wednesday. The Consumer Price Index is expected to grow by 7.3% in the twelve months to November, while the core CPI rate is expected to print 6.1% in the same period.
Regarding the Federal Reserve announcement, investors continue to bet in favor of a 50 bps rate hike, but the case for a 75 bps increase may get stronger if CPI data comes in above expectations.
From a technical perspective, the GBP/USD pair holds a positive bias according to indicators on the daily chart as the Cable trades above its main moving averages.
On the upside, the 1.2320 area is immediate resistance to overcome, followed by early December highs at 1.2345 and then the 1.2400 mark. On the other hand, support levels are seen at 1.2115 and 1.2065, the 200- and 20-day SMAs, respectively, followed by the 1.2000 psychological mark.