GBP/USD faces volatility ahead of ECB decision and US CPI/NFP data

GBP/USD trades cautiously near 1.2750 as markets brace for a high-impact data week featuring the ECB policy decision, US CPI, and Non-Farm Payrolls. Sterling has shown resilience despite mixed UK economic indicators, supported by expectations that the Bank of England will maintain higher rates for longer than other major central banks. The pair's near-term direction hinges on multiple catalysts, with ECB policy potentially affecting EUR/GBP cross flows and impacting cable indirectly. UK 2-year gilt yields remain elevated at 4.35%, providing yield support for sterling. Technical analysis reveals resistance at 1.2800 (psychological level) and support at 1.2700 (200-hour MA). US CPI data will be crucial, with any downside surprise likely pushing GBP/USD toward 1.2850, while hot inflation could see the pair test 1.2650 support levels.