Last week, we witnessed unexpected outcomes from the Federal Reserve and the European Central Bank meetings, and we also found out that the results of the UK inflation report remained unchanged. The expectation was for a slowdown from 8.7% to 8.5%. And despite all that the pound remains stable. The reason for this is today's Bank of England meeting. Considering the latest inflation data, there is a high probability that the British central bank will directly announce its intention to continue raising interest rates. However, no one is willing to take risks prematurely, especially given that the outcomes of the Federal Open Market Committee and the ECB's meetings were somewhat unexpected, to say the least. Therefore, investors exercise nimbleness and caution. Thus, the market will only come into motion after the meeting, and everything will depend on its outcomes.
The GBP/USD pair slowly retraced around the 1.2700 level. This led to a partial recovery of long positions, but there are no significant changes on the trading chart.
On the four-hour chart, the RSI downwardly crossed the 50 middle line, but it failed to stay below this level.
On the same time frame, the Alligator's MAs are intersecting each other. This indicates a temporary pause in the uptrend. In the daily period, the MA lines are pointing upwards, corresponding to the direction of the medium-term trend.
OutlookIn this situation, the outcome of the BoE meeting will play a key role in the subsequent price movement. Speculative bounces are expected based on the central bank's decision. Based on technical analysis, in order for the pair to retrace further, the exchange rate needs to stay below the 1.2700 level. Otherwise, there may be a gradual increase in long positions, and the pair could return to the 1.2850 level and prolong the uptrend.
In terms of complex indicator analysis, indicators are pointing to a pullback in the short and intraday periods. Meanwhile, in the mid-term period, the indicators are reflecting an upward cycle.