Early in the European session, the British pound is trading at around 1.1474. It is bouncing after the sharp fall to the low of 23 March at 1.1457.
According to the 1-hour chart, we can see that the British pound is trading at around (-1/8 Murray) and below 21 SMA (1.1525).
In the chart, we can observe a GAP between the closing price on Friday and the opening price of this week. The British pound is expected to cover this GAP in the next few hours. So, GBP/USD could close at around 1.1510.
In case the pound consolidates at around the psychological level of 1.1500, it could reach the 21 SMA located at 1.1525 and could even reach the top of the downtrend channel at around 1.1545.
GBP/USD is currently bouncing back after reaching the low of 1.1457. It is likely to continue its rise in the next few hours only if it trades above -1/8 Murray. There is an expectation that the pound can cover the gap and reach 1.1676 (200 EMA).
The growing likelihood that the Federal Reserve will continue to tighten its monetary policy makes investors consider the US dollar a safe haven. This is a factor that keeps the GBP/USD pair under strong downward pressure.
Investors are pricing in a 0.75% interest rate hike at the next monetary policy meeting in September. This decision will be unveiled on September 21. Analysts expect the sterling to recover part of the losses of last week in the week ahead.
The market sentiment report is showing that there are 81.95% of traders who are buying the pair. This is a positive sign for the pound as a technical rebound could occur in the next few hours and then the trading instrument will resume its main downtrend.
In case the British pound trades above -1/8 Murray (1.1475) and the 21 SMA located at 1.1525, it could be a positive sign for the pound but we should expect a consolidation above 1.1550.
On the other hand, if the British pound resumes its bearish cycle, we could expect a technical bounce around 1.1438 and 1.1417 (weekly support).
Our trading plan for the next few hours is to wait for a rebound above 1.1475 to buy with targets at 1.1525 and 1.1676.
