Early in the American session, the British pound (GBP/USD) is trading around 1.2045, above the 21 SMA, and 200 EMA. Meanwhile, it is under selling pressure because it is trading below the bearish trend channel formed since December 14.
GBP/USD recovered after the sharp decline from 1.1899 and is now trading above 1.2024 (200 EMA) with a slight bullish bias.
The GAP left at 1.2095 still has to be covered. GBP/USD is expected to reach this zone in the next few hours. In case the risk appetite continues to dominate the markets, the pair could test the key resistance zone of 1.2100.
In the afternoon of the American session, the Federal Reserve will publish the minutes of its monetary policy meeting for December. If the outlook is favorable for the US economy, we could expect a fall in the British pound. For this, it should trade below the psychological level of 1.2000.
On the contrary, in case the British pound consolidates above 1.2060, there is a probability of a rise and the instrument could reach 1.2100, 1.2145 (Weekly resistance), and even 6/8 Murray at 1.2207.
Since December 27, the Eagle indicator has been giving a positive signal. As long as it consolidates above 1.2024, the outlook could remain favorable for the British pound which aims to reach 1.2207 and could even reach the weekly resistance of 1.2268.
The key will be to watch the level of 1.2024 (200 EMA) to make a buy or sell decision. Our trading plan for the next few hours is to buy GBP/USD as it trades above the psychological level of 1.2000, with targets at 1.2140 and 1.2207.