Early in the European session, the British pound is trading around 1.2967 and above the 21 SMA located at 1.2930. We can see a strong technical bounce in GBP/USD as it reached 1.2797 and is now approaching the psychological level of 1.30.
According to the 4-hour chart, the British pound remains trading within an uptrend channel formed since July 24. In the next few hours, GBP/USD is likely to make a technical correction if it reaches the 61.8% Fibonacci around 1.3010, then it could fall to the 200 EMA level located at 1.2906.
On the other hand, with a sharp break of this uptrend channel and a close below 1.2900 in the 1-hour chart, we could expect a fall towards the 23.6% Fibonacci around 1.2880. The price could even reach 5/8 Murray at 1.2817.
In case the bullish trend prevails, we could expect a strong bullish movement. For this, we should wait for a daily close above 1.3010, then the instrument could reach 1.3061 (7/8 Murray) and 1.3183 (8/8 Murray).
Yesterday, the central bank of the United States increased its interest rate by 0.25% to reach 5.5%. This could be a factor that puts pressure on the British pound and we could expect it to reach 1.2500 in the short term.
The technical medium-term outlook remains bearish for the British pound. Therefore, as long as the instrument trades below the 61.8% Fibonacci and below the psychological level of 1.30, this could be seen as an opportunity to sell with targets of 1.25 and 1.20.
Our trading plan for the next few hours is to sell at the current price levels, around 1.2975 or wait for a pullback towards the R_2 daily resistance around 1.3010. A level that coincides with the 61.8% Fibonacci which will give us an opportunity to sell.
