Early in the American session, the British pound is trading around 1.2271 with a bullish bias and approaching the strong resistance at 1.23. The US data moved the market very strongly this morning, causing the GBP/USD pair to fall in a matter of minutes towards the support of 1.22 (+1/8 Murray).
The data published was the US Producer Price Index (PPI). It rose 0.3% on month in its November reading, exceeding the 0.1% forecast. After this data, the US dollar strengthened, causing a drop in the GBP/USD of almost 100 pips in a few minutes.
At the time of writing, we are seeing the British pound bouncing. It could continue its rise until it hits the strong resistance at 1.23. This level coincides with the zone of highs that the pound reached in July and November. If the level is rejected, we could see a strong technical correction towards to the 200 EMA 200 located at 1.2101.
In case of a daily consolidation above 1.2340, we could expect the British pound to reach the high of 1.2390 and could even reach the psychological level of 1.25. Finally, GBP/USD could reach the +2/8 Murray located at 1.2695.
The eagle indicator is giving a negative signal on the daily chart. Any technical bounce could be seen as an opportunity to sell.
Our trading plan for the next few hours is to wait for the British Pound to reach the 1.23-1.2343 area to sell, with targets at 1.2207 and 1.2101 (200 EMA).
