The US dollar has been gaining strength against the British pound in the past weeks, as the Fed hinted at a possible policy tightening amid rising inflation expectations.
The GBPUSD pair is now trading close to 1.2650, below a critical resistance level at 1.2700, with a mixed market mood.
The greenback still enjoys support from the higher inflation expectations and the likelihood that the Fed may taper its asset purchases.
The pair managed to break above 1.2600 and attempted to recover toward 1.2700 and the next target around 1.2900, but it lacked enough bullish momentum to sustain it.
Meanwhile, a short-term bearish correction is taking place. If the pair closes below the price level of 1.2500 on a H4 candlestick, it may continue to decline toward 1.2200 and 1.2000.