GBP/USD made a slight recovery from the low of Nov 01, 2020, around the psychological level of 1.3000.
The British pound stopped its downward path, as it received support from expectations that the Bank of England will raise interest rates at its meeting on Thursday.
Although Russia continues to bomb Ukrainian cities, this was not as negative as expected. Optimism about a diplomatic solution to end the war has more weight in the positive market sentiment as investors stopped taking refuge in gold and the US dollar.
This was evident from a generally positive tone in equity markets, which, along with the retreat in US Treasury yields, weighed on the strength of the US dollar and helped the pound to consolidate above 1.30.
On the other hand, investors are expecting the Fed to have an imminent start to tighten its monetary policy, which could support the US dollar and limit the GBP/USD recovery.
In the afternoon of the American session on Wednesday, the FED is scheduled to announce the result of the monetary policy meeting. Strong volatility is expected in all pairs against the US dollar.
Investors have already priced in an increase of 0.25 basis points by the Fed. This became evident when the Euro fell towards 1.08 and the Pound reached 1.3000. Only a 0.50 basis point increase could support for the US dollar. Otherwise, the dollar could suffer a drop.
On the 4-hour chart, we can see the formation of a falling wedge pattern. A trade above 3/8 Murray and above the 21 SMA located at 1.3045 could help the British pound recover and reach the area of 1.3338 (200 EMA).
On the contrary, if in the next few hours, the British pound consolidates below the 21 SMA and trades below 1.3030, it could accelerate the downward movement towards the support of 2/8 Murray around 1.2939.
The eagle indicator is giving a positive signal, but we should still wait for the news from the US regarding the interest rate. This announcement could be the trigger for one of the next movements of the pound.
