GBP/USD extends post-UK CPI retracement, slides closer to 1.40 handle

   •  Softer UK CPI dampened BoE rate hike expectations and prompts some weakness.
   • A goodish pickup in the USD demand adds to the downward pressure.
   •  Focus shifts to the UK jobs report ahead of the Fed and BoE.

The GBP/USD pair extended softer UK CPI-led retracement slide and is now inching back closer to the key 1.40 psychological mark.

After an initial uptick to session high level of 1.4067, the pair met with some fresh supply following the release of softer than expected UK inflation figures for the month of February. 

With investors looking past yesterday's positive news over a Brexit transition deal, a slightly disappointing headline CPI took some of the pressure off the Bank of England to hike interest rates again in the near-term and prompted some GBP weakness. 

Adding to this, a goodish pickup in the US Treasury bond yields helped revive the US Dollar demand and further contributed to the pair's intraday retracement of over 50-pips. 

The downside, however, remained limited as investors seemed to refrain from placing aggressive bets ahead of this week's important event risks - the Fed and BoE monetary policy decision. This along with the latest UK employment details should contribute towards making this an eventful week for the major. 

Technical levels to watch

A follow-through weakness below the 1.40 handle might prompt some aggressive long-unwinding trade and accelerate the fall towards 1.3960 horizontal level en-route 1.3930 support zone. On the upside, momentum back above 1.4030-40 area might continue to confront some resistance near the 1.4065-70 region, above which the pair seems all set to surpass the 1.4100 handle.