Early in the American session, the British pound is trading around 1.1557. A strong technical rebound is observed when the price reached the 1.1455 level, which coincides with 3/8 Murray.
GBP/USD changed its direction and has risen above the psychological level of 1.1500. The short-term technical picture for the pair shows that sellers are struggling to dominate the market. So, if GBP/USD consolidates below 1.1550, the bearish bias could resume.
We can see a strong resistance around the 21 SMA. In case the GBP/USD pair can consolidate above 1.1550, a continuation of the bullish move is expected and the price can reach 4/8 Murray at 1.1718.
The weakness of the dollar (USDX) is boosting GBP/USD in the last hours. In case the dollar continues without strength, it could favor the recovery of the British pound and it could gain momentum and reach the key level of 1.1719. Even though the US data that will be published tomorrow is negative, it could reach the psychological level of 1.20.
Tomorrow, the US Fed is widely expected to announce a rise of 0.75% in the official funds rate. The expectations of investors are set in the statement by the Fed Chairman as well as the prospects for the future. Investors are speculating on a moderate rate hike below 0.75% at the next policy meeting in December. This makes investors turn to risky assets and play against the dollar.
According to the 4-hour chart, we can see that the pound has a strong resistance around 1.1550-1.1565 because this area crosses the downtrend channel formed since October 25. A sharp break and daily close above this downtrend channel could signal a new bullish cycle and the price could reach 1.1718 (4/8) and 1.1962 (5/8).
Our trading plan for the next few hours is to sell the British pound only if it trades below 1.1549, with targets at 1.1474 (3/8) and 1.1371 (200 EMA).