GBP/USD Drops Below 1.2700 on Weak UK CPI Data Ahead of BoE Decision

GBP/USD has slumped 0.6% to 1.2680, breaking below the 1.2700 support level following disappointing UK inflation data. November CPI came in at 2.3% year-over-year, missing expectations of 2.4% and down from October's 2.5%. Core CPI also disappointed at 3.2% versus 3.3% expected, reinforcing the disinflationary trend. The weaker inflation figures reduce pressure on the Bank of England to maintain restrictive policy, with markets now pricing in a higher probability of rate cuts in early 2025. Technical analysis shows the pair trading below the crucial 1.3350 resistance, with bearish momentum accelerating after the CPI miss. Immediate support lies at 1.2650, while resistance at 1.2730 needs to be reclaimed for any bullish reversal. Tomorrow's BoE rate decision will be pivotal, with dovish guidance likely to extend sterling's losses toward the 1.2600 psychological level.