GBP/USD struggling to build a base above 1.2600 ahead of BoE, UK Retail Sales

• Sterling action continues to edge into the bottom end ahead of Retail Sales, BoE MPS.
• Brexit developments have returned to a steady stream of vague optimism with little forward momentum on the horizon.

GBP/USD continues to trade within the 1.2600 range, lifting to 1.2680 in early Wednesday trading, suffering a hit and sliding to 1.2600 after UK inflation slumped to a two-year low with annualized CPI clocking in at 2.3%, then catching a brief ride on the US Fed which raised rates as expected but dropped their expected 2019 rate hikes from three to two, then slumping once again despite greenback weakness to cap off a whippy Wednesday that went nowhere. Early Thursday now sees the Cable slowly lifting into 1.2630, and London markets will likely begin tightening ahead of the Bank of England's (BoE) monetary policy statement coupled with UK Retail Sales data.

At 09:30 GMT the UK's annualized Retail Sales for November are forecast to come in at 1.9% (last 2.2%), while 12:00 GMT has the BoE dropping their latest MPS along with their interest rate decision, which is firmly buried in no-change territory with slumping economic figures across the board, but investors will be keeping a close eye on the BoE's rhetoric to see if Chairman Mark Carney and company are going to shift further into dovish territory as Brexit angst continues to weigh heavily on both the GBP and the UK's domestic economy.

GBP/USD Levels to watch

Despite generating some lift from last week's late swing low, gathering limited momentum to plug back over the 1.2700 handle for a brief flicker, GBP/USD ran out of gas on Tuesday and is now slumping back into medium-term lows, spurning a bullish correction and remaining directionless in the short-term, as noted by FXStreet's own Valeria Bednarik:

After the FOMC decision, the GBP/USD pair lost little ground, now trading around 1.2625, offering a neutral-to-bearish stance in the short term, given that, in the 4 hours chart, its hovering around a directionless 20 SMA and still well below a bearish 200 EMA, while technical indicators turned lower, now piercing their midlines. The Sterling continues to be dependent on Brexit-related headlines, with speculative interest not interested in the pair unless some news from that front. The risk weekly low has been set at 1.2554, with chances of a downward move increasing on a break below it.

Support levels: 1.2590 1.2555 1.2510
Resistance levels: 1.2660 1.2695 1.273