Early in the American session, the British pound is trading around 1.2290, above the 21 SMA, and below the top of the symmetrical triangle. We can see a strong bullish bias that could break the area of 1.2320.
GBP/USD rebounded slightly during the European session after UK wage growth data revived expectations of a rate hike by 75 basis points by the Bank of England.
In the last few days, the British pound has been consolidating above +1/8 Murray located at 1.2207 which has become an important support for the pair. The latest candles on the 4-hour chart confirm that the pound could be preparing for a rally above 1.23 and the price could reach the high of 1.2343 and finally, the psychological level of 1.25.
A daily close above 1.2320 could mean a new bullish sequence and we could expect the pound to continue strengthening until the instrument reached the levels of 1.24 and 1.25. On the contrary, in case the pound falls below 1.23, we could expect weakness in the pair and it could reach support levels of 1.2250 (21 SMA) and 1.1915 (200 EMA).
In the next few hours, consumer inflation data will be published in the United States. If the report reveals higher-than-expected CPI, it will be bullish for the US dollar. On the contrary, if the CPI is below expectations of 7.7%, it could be favorable for GBP/USD. Hence, the currency pair might climb to the level of 1.2350 and could reach the area of 1.2395 which coincides with the resistance R3_daily.
Our trading plan for the next few hours is to wait for the British pound to fall below the 21 SMA located at 1.2252 in order to sell with targets at 1.2207 and 1.2075. The eagle indicator is giving a negative signal and it is likely that any rally in the pound could be seen as an opportunity to sell.
