During the American session, the British pound (GBP/USD) is trading around the strong resistance at 1.1650. The GBP/USD pair gained momentum during the first hours of the American session in response to the inflation figures that were lower than the general consensus.
On the 4-hour chart, we can see the formation of a symmetrical triangle that was broken by the US inflation data. Currently, the pair is above the 21 SMA and above the 200 EMA. This means that the pair could continue rising in the next few hours towards 8/8 Murray located at 1.1718
In case the British pound breaks the strong resistance located at 1.1650 which was tested on October 25, we could expect it to continue rising towards 1.18. Around this zone, there will be an opportunity to sell.
On the other hand, in case the pound consolidates below the resistance of 1.1650, we could expect a technical correction towards the 21 SMA located at 1.1474 and GBP/USD could even reach the 200 EMA located at 1.1378.
The latest 4-hour candles confirm that the market was pricing in a decline in the US inflation data, so we could see that the British pound has been under bearish pressure since November 7.
Commonly, the markets react against the general consensus. We could see a weakness in the US dollar and this favored the strength of GBP/USD. The sterling gained almost 200 pips in a few hours. A technical correction is likely to occur in the next few days. Indeed, whenever such data is published, the market returns to the initial point before the data release.
Our trading plan for the next few hours is to sell below 1.1650 or wait for a pullback to 1.1718 to sell with targets at 1.1417 and 1.1380. The eagle indicator is giving a positive signal but could approach a resistance zone which could encourage the technical correction of the pair.