GBPUSD has formed higher lows connected by a rising trend line that’s been holding since June. Price could be ready for another test of support, which lines up with the Fibonacci retracement levels.

The 38.2% level is close by at 1.2993 while the 50% level is at 1.2916. A larger correction could reach the 61.8% Fib that lines up with the trend line support and area of interest at the 1.2900 major psychological mark.

If any of these hold as a floor, Cable could resume the climb to the swing high at 1.3143 or higher. Technical indicators are pointing to a likely continuation of the uptrend.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support levels are more likely to hold than to break. The 100 SMA even lines up with the trend line to add to its strength as support.

Stochastic is on the move down for now but appears to be bottoming out as it dips to the oversold region. Turning higher would mean that buyers are ready to return and sustain the uptrend.

RSI has more room to slide before reaching the oversold area to reflect exhaustion among sellers, so the correction could keep going until it does.

GBPUSD could take cues from UK CPI data coming up next, as another strong read could reinforce BOE tightening bets. A decline in price pressures is eyed from 8.7% year-over-year annual inflation to 8.2% for June.

Earlier on, the US retail sales report fell short of estimates, keeping traders doubtful that the Fed can extend its tightening cycle until the end of the year.

Later on, the UK retail sales report is due on Friday and might show a dip in consumer spending as well. Leading indicators are hinting at a slight pickup in spending, though, so a strong read could reassure pound bulls that stagflation risks could be avoided.