GBP/USD continuing Friday's late bounce on quiet markets, thin volume

• Sterling up in Asia, looking for buyers before Europe open.
• UK CPI data due Tuesday; positive beat could spark a risk run.

GBP/USD appears to be turning away from 1.3872 ahead of European market open, trading into 1.3850 as of writing.

The Sterling drifted upwards on light volume during Asia, a welcome bounce following a rough week that saw the UK's currency take a haircut against the US Dollar. The Pound was the markets' loser of choice following a run on risk appetite, with flinching markets sending equities lower as inflation fears come to bear in the face of increasing economic growth and central banks planning to begin raising interest rates. The Bank of England (BoE) has been notably positive regarding the UK's economic prospects, with the BoE's Deputy Governor Ben Broadbent taking to radio waves last week to prime markets for severel rate increases in the future, noting a willingness on the BoE's part to move rate increases up the calendar if growth data supports it.

This Tuesday sees the UK dropping their CPI data for January, at 09:30 GMT. A positive beat to inflation data could see the bullish trend on GBP/USD begin anew, assuming risk aversion doesn't take hold of markets again, sending traders scurrying into safe haven assets.

GBP/USD Technicals

Intraday support/resistance is priced in at 1.3780 and 1.3980 respectively, while price appears to be battling it out with support-turned-resistance at 1.3855. Daily candles show the longer term uptrend still intact, and the pair may manage to price in a turnaround from support given by the 34 EMA at 1.3830. Continued risk aversion in global markets could see a breakdown from here into support at 1.3580, bringing GBP/USD closer to the 200-day SMA, still staunchly bullish at 1.3215.