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.
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.
Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.