GBP/USD Daily Forecast – Resistance At 1.3300 In Sight

GBP/USD Video 19.08.20.

Strong Inflation Data Provides Additional Support To The British Pound

GBP/USD managed to get above the resistance at 1.3200 and continues its upside move as the U.S. dollar remains under significant pressure against a broad basket of currencies.

The U.S. Dollar Index has managed to settle below the support at 92.50 and has good chances to continue its downside move which would be bullish for GBP/USD.

Currently, the U.S. Dollar Index managed to find some support near 92.10 but it remains to be seen whether this support level will be strong enough.

The UK has just released inflation data for July. Inflation Rate increased by 0.4% month-over-month compared to analyst consensus which called for a decrease of 0.1%.

On a year-over-year basis, Inflation Rate increased by 1.0% compared to analyst consensus of 0.6%.

Core Inflation Rate was up by 0.4% month-over-month and gained as much as 1.8% year-over-year.

The strong inflation data suggests that the UK has avoided deflation thanks to its monetary stimulus program and that the Bank of England would not need to adopt negative interest rates. This is bullish news for the British pound.

Technical Analysis

GBP/USD has gained upside momentum above 1.3200 and is heading towards the next resistance level at 1.3300. RSI is in the overbought territory but has not yet climbed to recent highs so there is some room to gain more momentum.

In case GBP/USD manages to get above 1.3300, it may gain additional upside momentum and head towards the next resistance level at 1.3425.

Back in December 2019, GBP/USD managed to get to 1.3500 after it breached the resistance at 1.3200 but lost momentum and declined towards 1.3000. GBP/USD bulls will likely watch the trading action closely to ensure that this scenario does not present itself in August of 2020.

On the support side, the previous resistance at 1.3200 will likely serve as the first important support level for GBP/USD. A move below this level will open the way to the test of the next support level at 1.3110.

From a big picture point of view, GBP/USD managed to get out of consolidation and continues its upside move.

For a look at all of today’s economic events, check out our economic calendar.