Early in the American session, the British pound is trading around 1.2319 above the 21 SMA and within a symmetrical triangle pattern. During the last few days, we have seen a consolidation of the pair. This is because investors are cautious about the interest rate decisions by the US and UK central banks.
With the FOMC taking all the attention of investors this week, the market becomes more cautious as the announcement can trigger a lot of volatility.
In case Fed Chairman Jerome Powell signals another rate hike in May, this could be seen as a hawkish surprise and help the US dollar gain strength.
From a technical point of view, GBP/USD has managed to hold its support at around 1.2280. However, after the Fed announcement, we could see a strong move in the pair.
For this, we should expect GBP/USD to consolidate above 1.2330 to buy with the target at 1.2450 (7/8 Murray). Alternatively, we can wait for a drop below 1.2310 to sell with the target at 1.2207 (6/8 Murray).
According to the 1-hour chart, GBP/USD is likely to rise and reach the 1.2451 zone. The key will be to wait until the price consolidation above the 200 EMA located at 1.2335.
The eagle indicator is showing signs of a probable technical rebound, which could be seen as a buying opportunity if GBP/USD rebounds from about 1.2270.