The British pound has regained bullish momentum after the release of UK inflation data. The CPI data showed the UK inflation rate dropped to the lowest level the country has seen since February 2022, driven by a significant decrease in food and energy prices. The Office for National Statistics (ONS) said Consumer Prices Index inflation was 6.8% in July, down from 7.9% in June. Meanwhile, the Core CPI remained stubbornly high at 6.9% in July, holding steady from the previous month. The GBP bounced as investors expect the Bank of England to continue tightening policy to bring down inflation as consumer price growth could take years to fall back to 2%.
So far today the British pound held firm against many other rivals, including the Dollar, euro and commodity-linked currencies. GBPUSD trades above 1.2750 now. Although the medium-term trend is mixed, in the short term it seems that evidence is starting to emerge that a short-term recovery of the pair. On the upper side, the next resistance is located around 1.2780, a break above this level will confirm a possible move to 1.2830/40 in the short-term. On the downside, key double-bottom support seems to have formed in the 1.2610 area. A daily close below that area could be seen as a strong bearish shift and open the floor to an extended slide toward 1.2540.
