GBP/USD capped on soaring US dollar to 45-month highs

• GBP/USD: CPI bid on 1.30 handle shortlived as dollar soars.
• EU and UK trade negotiations are a focus as formal talks will kick-off next month.

GBP/USD is currently trading at 1,2916 between a range of 1.2914 and 1.3023 on a day where the US dollar has extended gains around 45-month highs. The UK data gave the pound a boost which has since been deteriorated by dollar strength. 

GBP/USD had been on the rise after the Consumer Price Index jumped from 1.3% yearly to 1.8% in January – leaping over expectations, which stood at 1.6%. Both goods and services components increased in January, with the strongest gains seen in the housing/household services, transport, and clothing categories. With headline inflation in line with the BoE's forecast and core only 0.1 % weaker, this report should largely confirm the MPC's view from its January forecast meeting. More here: Breaking: UK annualized CPI beats estimates with +1.8% in Jan, GBP/USD regains 1.3000

Meanwhile, the EU and UK trade negotiations are a focus as they will kick-off next month. We are getting snip bits of sentiment as we progress through the year though and the EU continues insisting on regulatory alignment and playing by its rules in return for easy market access. UK has stressed that the whole point of Brexit was that Britain would be able to set its own rules.

• Brexit: EU ambassadors fail to agree on approach to level playing field, GBP/USD negative

FOMC up-next

The next key event will be coming in the form of the Federal Reserve's Meeting Minutes which traders will look to as they are set to shed some light on January's decision. The coronavirus is a particular threat to the Fed's neutral stance and any hints of dovishness could buckle the US dollar's recent advance. 

• US Dollar Index Price Analysis: DXY unstoppable ahead of FOMC, trading near 45-month highs

GBP/USD levels

• GBP/USD Price Analysis: Pound trading near four-day lows, sub-1.3000 level