GBP/USD found strong resistance at around 1.2030-1.2045. Having failed to maintain its upside momentum, the pair is pulling back, trading below the psychological level of 1.20. The risk-off market sentiment could help the US dollar recover and weigh on the British pound.
According to the 4-hour chart, we can see the rising wedge formation. The British Pound is likely to bounce at around 1/8 Murray which coincides with the bottom of the uptrend channel.
On the other hand, in case the technical correction continues, the support of the 21 SMA located at 1.1943 could offer a chance of a technical bounce for the British pound.
Last week, several FOMC members said they would advocate for a 75-basis point rate hike at the next policy meeting on July 26-27. This information weakened the US dollar index (USDX) and provided some support to the GBP/USD pair. Thus, it makes sense to wait for some technical correction in GBP/USD before it resumes the uptrend.
On the contrary, should the British pound break and consolidate below the 21 SMA located at 1.1943, we could expect an acceleration to the downside and the trading instrument could reach the support of 1.1804 and could even drop to the low of 1.1758.
Our trading plan for the next few hours suggests that the British Pound may consolidate above 1/8 Murray at around 1.1962. Hence, we could buy with targets at 1.2030 and 1.2133 (200 EMA).
The eagle indicator is showing signs of a probable technical correction. However, the bullish bias could resume. For this to happen, we should expect the pound to settle above 1.1940.
