As we have already mentioned in the fundamental analysis, investors expect the Fed to slacken the key rate hike. Meanwhile, most investors foresee that the BoE will raise the benchmark rate by 1.0% to 4.50% by the summer. Now, the BoE's key interest rate totals 3.50%. That is why today, traders will focus on Andrew Bailey's speech. What is more, this week, the UK will disclose a bulk of important macroeconomic reports that may either boost the pound sterling or put pressure on it.
From the technical point of view, the pound/dollar pair is trying to enter the zone of a mid-term bullish market. It has been trying to break a strong resistance level of 1.2230 for the third day in a row (EMA 50 on a weekly chart). At the same time, the pound/dollar pair is above the key support level of 1.2110 (EMA200 on the daily chart). That is why it is better to open long positions.
If the price successfully breaks the long-term resistance level of 1.2230, it will start moving towards the key resistance levels of 1.2750 (EMA144 on the weekly chart), 1.2900 (EMA 200 on the weekly chart), which separate a long-term bullish trend from the bearish one.
According to the alternative scenario, the pound/dollar pair may return to the bearish market by breaking the support levels of 1.2110 and 1.1990 (EMA 144 and a lower line of the upward channel on the daily chart).
The first sell signal will be formed just after a breakout of the important short-term support level of 1.2143 (EMA 200 on the one-hour chart).
Until the price is above the support level of 1.2110, it is better to go long.
Support levels: 1.2143, 1.2110, 1.2100, 1.2065, 1.2030, 1.2000, 1.1990, 1.1900, 1.1840, 1.1800
Resistance levels: 1.2230, 1.2300, 1.2340, 1.2400, 1.2440, 1.2500, 1.2750, 1.2800, 1.2900
Possible scenarios:
Sell Stop 1.2140. Stop-Loss 1.2260. Take-Profit 1.2110, 1.2100, 1.2065, 1.2030, 1.2000, 1.1990, 1.1900, 1.1840, 1.1800, 1.1575, 1.1500, 1.1400, 1.1300, 1.1200, 1.1160, 1.0940
Buy Stop 1.2260. Stop-Loss 1.2140. Take-Profit 1.2300, 1.2340, 1.2400, 1.2440, 1.2500, 1.2750, 1.2800, 1.2900