GBP/USD Forecast: UK CPI to reaffirm near-term bullish outlook

The US Dollar tumbled to fresh 10-month lows during Asian session on Tuesday after reports crossed the news wires that two Republicans senators announced their rejection of the US President Donald Trump's health care bill. Against the backdrop of uncertainty over the pace of the Federal Reserve's policy tightening, Trump's failure to deliver on healthcare reforms weighed heavily on the greenback and helped the GBP/USD pair to recover all of its previous session's corrective losses.

The pair is hovering closer to 10-month highs, around the 1.3100 handle, as investors now look forward to the latest UK inflation figures, due for release during European session. With the BOE Governor Mark Carney's recent hawkish remarks, and the fact that headline CPI could rise over 3%, today's release could turn out to be a game changer for the British Pound. A stronger reading would prompt market participants to start pricing in an eventual BOE monetary policy action, sooner rather than later, and provide a fresh bullish impetus for GBP crosses.

Even from a technical perspective, the pair regained traction near a strong resistance break-point, now turned support near mid-1.3000s and is currently placed at an important juncture. A strong follow through buying interest is likely to accelerate the upward trajectory towards 1.3170 resistance area marking 61.8% Fibonacci expansion of 1.2109-1.3048 up-swing and subsequent retracement. Alternatively, any corrective move might continue to find some fresh buying interest near the 1.3050-30 region, which if broken could negate the bullish bias and open room for additional profit taking slide in the near-term.