GBP/USD extends the strong rebound from the 1.2030 zone, having accumulated over 170 pips. The instrument has been gaining traction for the second day in a row on Tuesday. The pair received an additional boost after the release of encouraging UK jobs data and is trading at 1.2194 at the opening of the American session.
The technical outlook points to a continuation of the bullish move, but the markets' reaction to the US January inflation report should trigger the pair's next directional move. In case the report is negative for the United States, we could expect a sharp drop in the GBP/USD pair and it could reach the psychological level of 1.20.
Currently, the British pound is trading above the 21 SMA and the 200 EMA. In case GBP/USD consolidates above 1.2170, there is a strong probability that the British pound could reach the 1.2270 resistance zone.
Conversely, a sharp break below 1.2172 could signify a strong technical correction and the instrument could reach the area of the daily pivot point located at 1.2115 and 3/8 Murray at 1.2085.
Our trading plan for the next hours is to buy above 1.2170, 1.2220, and 1.2270. Alternatively, should the pound reach the 1.2270 resistance zone, it will be a clear signal to sell with targets at 1.2150 and 1.2015.
