The British Pound is trading within the range between the 21 SMA and the 200 EMA. As we have mentioned in our previous reports, GBP/USD is under bearish pressure below 4/8 Murray. In the next few hours, the decision of the Bank of England will be announced.
As with all monetary policy announcements regarding interest rates, the British pound is likely to see a strong technical correction as the market has already priced in a rate hike of 0.50%. In case the BoE surprises the market with a higher rate hike, the pound is likely to resume its bullish cycle. Conversely, a drop to the 2/8 Murray support around 1.1962 will occur.
The area of 1.2194 is a level to consider because it is the 21 SMA that acts as a top. Besides, it is the same level where 4/8 Murray converges. So, it has become a zone of strong resistance.
A daily close and break above 1.2207 could mean an acceleration to the upside and the price could reach 1.2293 (the Aug 01's high) and even reach 5/8 of Murray at 1.2329.
In the opposite direction, a consolidation below 1.2124 would leave the pound vulnerable. At that level, the 200 EMA is located and right there it crosses the uptrend channel. If the pound falls below this level, it means a break in the uptrend and the currency pair could start a new bearish cycle that could reach the area of 1.1962.
Since July 28, the eagle indicator is giving an overbought signal, so a technical correction is likely in the coming days towards the psychological level of 1.20 even up to 1.1962 (2/8 Murray).
The 4-hour chart shows that the pound continues to trade within the trend channel formed on June 14. Below this channel, the scenario could change and the pound could resume its bearish cycle and it could reach 1.2000 and even 1.1780.