• GBP/USD trades in negative territory for two straight days on Wednesday. 
• The major pair holds below the key EMA with an oversold RSI condition.
• The critical support level will emerge at the 1.2600 mark; 1.2686 acts as an immediate resistance level for GBP/USD. 

The GBP/USD pair faces some selling pressure above 1.2600 during the early European session on Wednesday. Investors await the UK Consumer Price Index (CPI) for December for fresh impetus. The headline UK inflation is estimated to grow 3.8% YoY, while the Core CPI is expected to rise 4.9% YoY. GBP/USD currently trades near 1.2607, losing 0.18% on the day. 

Technically, GBP/USD holds below the 100-hour Exponential Moving Average (EMA) on the four-hour chart, which means further downside looks favorable.

The key contention level will emerge at the 1.2600 mark, representing the psychological round level and the lower limit of the Bollinger Band. Any decisive follow-through selling below the latter will see a drop to a low of December 7 at 1.2544, followed by the confluence of the round mark and a low of December 13 at 1.2500. 

On the upside, a low of January 8 at 1.2686 acts as an immediate resistance level for GBP/USD. The additional upside filter to watch is a high of January 8 at 1.2767, and finally the upper boundary of the Bollinger Band at the 1.2800 mark.

It’s worth noting that the Relative Strength Index (RSI) holds in bearish territory below 50. However, the oversold RSI condition indicates that further consolidation cannot be ruled out before positioning for any near-term GBP/USD depreciation.

GBP/USD four-hour chart