Early in the European session, the British pound is trading around 1.2062, above the 21 SMA and below the 200 EMA. Yesterday, during the American session, GBP/USD rebounded strongly when it reached a low of 1.1922.
This bounce in the British pound left a double bottom formation that coincides with the low of February 17 when it reached 1.1914. This rally of GBP/USD above 140 pips could be seen as a sign of recovery and reach 4/8 Murray at 1.2207 in the next few hours.
From a daily chart perspective, GBP/USD formed a bullish engulfing candle. This is a sign of recovery in the short term. The UK is very close to reaching a post-Brexit trade agreement with the EU which could give a boost to GBP, which could go as high as 1.25.
As long as GBP/USD remains trading above the psychological level of 1.20 and above the 21 SMA located at 1.2013, it is expected to continue rising and can reach 1.2112 (200 EMA) and at 4/8 Murray, located at 1.2207.
The British pound has broken the downtrend channel, formed since February 13. A pullback towards this area is likely, which could give us an opportunity to buy around 1.2023.
The eagle indicator is giving an overbought signal, which is likely to have a technical correction in the next few hours, so it will be seen as an opportunity to buy.
