Early in the European session, the British pound is trading around 1.1840 above the 21 SMA and around the 1/8 Murray line. The GBP/USD pair has remained consolidated for the last 24 hours at the same trading levels because the market has discounted Powell's aggressive tone.
The key data that could give strong volatility to the British pound is the nonfarm payrolls which will be released on Friday. Meanwhile, a recovery is expected in the next few hours only if the British pound consolidates above 1.1840.
If GBP/USD continues to trade above support at 1.1840 which gives the bulls the opportunity to buy at a good price, the pair could reach the 2/8 Murray zone at 1.1962 and could even reach the psychological level of 1.20.
A change in trend could occur if the British pound breaks the top of the downtrend channel and consolidates above 1.2065. Above this level, the upside target will be 1.2207 (4/8 Murray) and could even go as high as 1.2446 (January high).
Conversely, if the British pound trades below the 200 EMA located at 1.1962, the instrument could decline towards 1.1775 and projections of 1.1640.
On the 1-hour chart, we can see a downtrend channel formed since February 24 and an inverted pennant pattern. In case the British pound falls below 1.1820, the sell signal could be activated and the instrument could reach 1.1775. After breaking the channel, it could reach 0/8 Murray at 1.1718.
Our trading plan is if the pound trades above 1.1840, it will clearly be a signal to buy with targets at 1.1962. On the contrary, if it falls below 1.1820 we can sell with targets at 1.1770 and 1.1718 (0/8 Murray). The eagle indicator is giving oversold signals, so GBP/USD is likely to have a technical bounce in the next few hours.