Early in the European session, the British pound is likely to trade around 1.1438. A slight technical correction can be seen after reaching the maximum at 1.1498, yesterday in the American session.
The British pound received strong support due to the speech of the Prime Minister of the United Kingdom, Rishi Sunak, where, in his first speech, he reiterated that economic stability and confidence would be at the center of his agenda.
Yesterday, the US dollar also (USDX) lost strength against its main crosses, and US Treasury bonds fell sharply. The 10-year yield fell from 4.25% to 4.03%.
The British pound formed a double-top pattern around 1.1498. This level represents a key level and above this area, we would expect the pound to continue its rise. In this case, it could reach the 1.1718 level.
The 7/8 Murray level (1.1474) became a strong resistance. In the event that the British pound continues to trade above this level, we would expect it to continue to rise. It may also reach 8/8 Murray at 1.1718.
Conversely, GBP/USD is expected to find support around 1.1380, which represents the daily pivot point. If the technical correction continues we could expect a technical bounce around the 200 EMA located at 1.1310.
According to the 4-hour chart, we can see that the British pound has an uptrend channel formed on October 11. The top of the bullish channel coincides with the high of October 5. A strong break above 1.1510 is likely to occur and we could expect a bullish acceleration.
On the other hand, if the British pound falls below 1.1310 (200 EMA - 21 SMA) the bearish bias is expected to continue. The price could reach 1.1230 and even fall towards the bottom of the uptrend channel at 1.1162.
Our trading plan for the next few hours is to wait for a technical bounce at 1.1380 to buy or wait for a technical correction around 1.1310 (200 EMA) to buy with targets at 1.1476 and 1.1718.
