Early in the American session, the British pound quickly fell below the 200 EMA located at 1.2171.
It is currently trading below the 3/8 Murray around 1.2056. This drop in the British pound is due to better-than-expected UK inflation data.
The technical outlook points to a short-term downtrend. A close below 1.2030 on the 4-hour chart could open the door for further losses and the instrument reach 2/8 Murray at 1.1962.
In case there is a pullback towards the 21 SMA located at 1.2131, it could be considered an opportunity to sell with targets at the psychological level of 1.20 and at 1.1960.
On the other hand, given that the pound is showing signs of being oversold on the 1-hour chart, we expect a technical bounce above 1.2030 which will be seen as an opportunity to buy with targets at 1.2085 and 1.2114 (21 SMA).