On June 16, the pound sterling reached a high of 1.2405 after reaching a low of 1.1932 on June 14. In less than 48 hours, the pound gained more than 450 pips. This is a sign that there could be a recovery in the coming days if it consolidates and stays above the 21 SMA (1.2185).
The pound made a strong technical correction on Friday and found support above the 21 SMA. According to the Fibonacci indicator, the British pound retraced 50% of the upward movement from the high of 1.2405, reaching the level of 1.2171.
The GBP/USD pair is consolidating above the 21 SMA and 2/8 Murray. Is showing signs of a further technical bounce in the coming hours. The pair is currently trading at 1.2240 and buyers could try to push the price if the level of 1.2185 remains intact.
As expected, the Bank of England announced on Thursday an interest rate hike of 0.25% to 1.25%. However, the bank could hike 0.50% at its next monetary policy meeting. The pound sterling took advantage of the aggressive stance of the Bank of England. This information could be a factor that helps the pound to recover in the coming days.
In case the pair manages to hold above 1.2185 (21 SMA), it could rally towards 1.2479 (200 EMA). This level will be a strong barrier for the British pound and we could expect a technical correction below this area again.
On the contrary, if in the coming days the British pound manages to consolidate below the SMA of 21 located at 1.2185, we could expect it to fall again and reach the psychological level of 1.20. It could even retreat to the low of 1.1932.
The eagle indicator broke a downtrend channel and is now consolidating above this level. This could be a positive sign for the British pound and a bullish move is likely to occur in the coming days.
