In the last few weeks, the GBPUSD pair has been falling as the US dollar became stronger due to higher inflation expectations and signals from the Federal Reserve that it may tighten its policy.
The pair is now trading near 1.2720, above a key support level at 1.2700, with a mixed market sentiment.
The US dollar still has support from the higher inflation expectations and the chance that the Fed may reduce its asset purchases.
As the pair broke above 1.2600, it started to recover toward 1.2700 and the next target around 1.2900 was about to be reached if sufficient bullish momentum was maintained.
In the mean time, a short-term bearish pullback is being expressed. If the pair closes below the price some of 1.2500 on a H4 candlestick, it may continue to drop toward 1.2200 and 1.2000.