Early in the American session, the British pound is trading below the 21 SMA located at 1.1971 and below 2/8 Murray. GBP/USD is trading under selling pressure. Thus, the currency pair could continue the decline in the coming hours and reach the 61.8% Fibonacci around 1/8 Murray at 1.1840.
In the European session, the GBP/USD pair faced rejection near the psychological level of 1.2000. Now, it has been falling for the second day in a row and could decline even lower until it reaches the support of 1.1840.
In the next few minutes, the decision of the European Central Bank will be on tap. Investors expect the ECB to raise the key interest rate by 0.50%. The announcement will directly influence the euro but could trigger some volatility around the GBP/USD pair.
After the inflation and employment data that were released, investors are convinced that the Bank of England will be able to increase the interest rate by 50 basis points in August.
On the 4-hour chart, we can see that the British pound is under downward pressure. The bottom line is to wait for a technical bounce around the zone 61.8% Fibonacci located at 1.1860 to buy with targets at 1.1971(21 SMA) and 1.2123 (200 EMA).
On the other hand, in case there is a break of the 21 SMA located at 1.1971, it could clearly be a positive sign. Hence, the pair could continue the rise and reach the resistance of 1.2042. The price could even go towards the 200 EMA located at 1.2123.
As long as the British pound continues trading below 2/8 Murray at 1.1962, it will remain under bearish pressure. GBP/USD could reach the key support area of 1.1840. Around this zone is located the 61.8% Fibonacci. It opens an opportunity to resume buying. The pair could make a strong technical bounce, reach 1.2139, and even climb to 4/8 Murray at 1.2207.
On the 4-hour chart, we can observe the formation of a head and shoulders pattern. In case this technical pattern is complete, the British pound should not fall below 1.1840. Above this level, GBP/USD is likely to recover the bullish bias in the coming days and weeks and could reach levels of 1.2329 (5/8 Murray).