Early in the European session, the British pound is trading around 1.2398 showing a slight technical correction after reaching 1.2417 in the Asian session.

Yesterday during the American session, the British pound made a strong technical rebound when it reached the bottom of the uptrend channel formed since January 11.

According to the 4-hour chart, we can see that the British pound has been trading within a downtrend channel formed since January 18. A few hours ago, the GBP/USD pair managed to touch the top of this channel and we could expect a technical correction towards the 21 SMA at 1.2361. The instrument could even reach an area of 1.2310 (bullish channel bottom).

On the other hand, in case the GBP/USD pair consolidates below 1.2361 there is a strong signal that the pound could fall and even break the bullish channel and reach the area of 6/8 Murray located at 1.2207.

Additionally, if bullish strength prevails, we could expect a pullback towards 7/8 Murray located at 1.2450. In case this level acts as a barrier and the pound fails to consolidate above this zone, it will be seen as an opportunity to sell, with targets at 1.2360 (21 SMA) and 1.2207 (6/8 Murray).

In case the pound resumes its bullish cycle, we should expect it to consolidate above 1.2450, then it could reach the psychological level of 1.25 and 8/8 Murray located at 1.2695.

Our trading plan for the next few hours is to sell the pound below the downtrend channel around 1.2414 or to wait for a pullback towards 1.2451, with targets at 1.2361, 1.2300 and 1.2207

Relevance up to 05:00 2023-01-31 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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