Overview :
The British pound rose above 1.2843 for the first time in a year in Wednesday's Asian session, powering on to fifteen-month highs before returning some ground, as investors remain convinced that the Bank of England has perhaps more work to do than any major central bank if it's going to contain inflation.
The GBP/USD pair will continue to rise from the level of 1.2843. The support is found at the level of 1.2843, which represents the 61.8% Fibonacci retracement level in the H4 time frame. The price is likely to form a double bottom. Today, the major support is seen at 1.2843, while immediate resistance is seen at 1.3000.
Accordingly, the GBP/USD pai pair is showing signs of strength following a breakout of a high at 1.3000. So, buy above the level of 1.3000 with the first target at 0.9990 in order to test the daily resistance 1 and move further to 1.3078. Also, the level of 1.3100 is a good place to take profit because it will form a double top. Amid the previous events, the pair is still in an uptrend; for that we expect the GBP/USD pair to climb from 1.2843 to 1.3000 today.
At the same time, in case a reversal takes place and the GBP/USD pair breaks through the support level of 1.2843, a further decline to 1.2803 can occur, which would indicate a bearish market. The GBP/USD pair rallied in Asian trade to a high of around the spot of 1.2703 ahead of the European open thanks in part to a softer US Dollar.
The pair does appear to be struggling to reach last week's highs around 1.2750 as rangebound trade has been a constant theme. The U.S. dollar edged higher in early European hours Wednesday as weak Chinese activity data hit risk sentiment ahead of the release of minutes from the Federal Reserve's latest meeting.
On the one-hour chart, the GBP/USD pair continues moving in a bullish trend from the support levels of 1.2703 and 1.2650. Currently, the price is in a bullish channel. This is confirmed by the RSI indicator signaling that we are still in a bullish trending market. As the price is still above the moving average (100), immediate support is seen at 1.2688, which coincides with a golden ratio (38.2% of Fibonacci).
The GBP/USD pair appears to have found an anchor around 1.2688, which likely signals some reluctance for markets to take the pair sustainably above the benchmark 1.2688 level, given uncertainty about the Fed's tightening peak, but still mirroring the support offered by the very hawkish ECB messaging. Consequently, the first support is set at the level of 1.2688.
So, the market is likely to show signs of a bullish trend around the spot of 1.2688/1.2703. In other words, buy orders are recommended above the golden ratio (1.2749) with the first target at the level of 1.2790. Key level has alreadt set at the point of 1.2703, hence; GBP/USD fell 0.15% to 1.2703, ahead of U.K. services PMI data for July, while USD/JPY rose 0.18% to 144.69, still trading below the 140 level that spurred intervention by Japanese authorities last autumn.
Furthermore, if the trend is able to breakout through the first resistance level of 1.2790. We should see the pair climbing towards the double top (1.2847) to test it. It would also be wise to consider placing a stop loss; This is set below the second support at 1.2590.