After the push above 1.3600, the latest nudge higher to test the 200-day moving average was coming but it needed confirmation from the US CPI report yesterday. Despite 7% US inflation, markets shrugged the report as it did not exceed expectations and the dollar slumped. And the drag in the greenback is continuing into today.
As things stand, buyers are now facing a key technical resistance level and must hold above it into the close in order to extend the upside momentum further. Quite honestly, a lot of the positive factors on the Fed front has already been priced into the dollar and with the breakout in EUR/USD, we're likely seeing more of a short squeeze in positions here.
That could help to propel GBP/USD even higher above the resistance highlighted above, allowing buyers to retest 1.3800 and the October highs around 1.3830-33 next. I reckon that might be a good area for sellers to lean on but in the meantime, it looks like the dollar could face more pressure with technical levels cracking across the board.