Early in the European session, the British pound is trading around 1.2946 below the 21 SMA and above the 6/8 Murray.
We can see a strong retracement of the GBP/USD pair after having reached the psychological level of 1.30 and a high of 1.3141.
The British pound is likely to resume its bullish cycle in the next few hours on condition it consolidates above 1.2940 (6/8 Murray). GBP/USD could reach the 21 SMA located at 1.3037.
The British pound accelerated its fall after the publication of the UK inflation data and reached a low of 1.2866. This data was favorable for the United Kingdom's economy because the annual CPI declined below the 8.2% forecast.
Although these expectations were good for the GBP/USD pair due to the fact that inflation is ebbing away, it could also be detrimental as expectations of a rate hike by the Bank of England have decreased and it has driven investors away.
According to the 4-hour chart, the British pound retraced from the 1.3141 high (July 14) to the 1.2866 low (July 19) which represents a 50% Fibonacci retracement from the 1.2590 low to the 1.3141 high. This could mean that in the next few days, we could expect a recovery of the pound and it could reach 7/8 Murray located at 1.3061.
