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Since last Wednesday, the pound gained almost two hundred and fifty points, afterwards it slightly retreated. It is quite natural after such a significant growth. The pound will probably edge down in today's European session, weighed down by the UK's inflation report, which should slow down from 10.1% to 9.7%.
Inflation (UK):
But this is just a warm-up before the main event of the week. Or maybe even the month. Today's Federal Open Market Committee meeting is highly important. A couple of weeks ago, it looked like the Federal Reserve would still raise the federal funds rate by 50 basis points, and announce a further tightening of monetary policy. But after two U.S. banks collapsed and at least one more bank ran into huge problems, there is no doubt that the Fed will hike rates by 25 bps. Moreover, there is a high probability that Fed Chairman Jerome Powell will change his stance today and finally announce the start of gradual monetary easing. Which will certainly lead to a significant weakening of the dollar. So not only will the pound rise to yesterday's highs, but it will also climb higher.
The refinancing rate (United States):
GBPUSD, during a pullback from the resistance level of 1.2300, reached 1.2200. It is possible that this pullback serves as a stage of regrouping of trading forces, where 1.2200 acts as support.
On the four-hour chart, the RSI has moved out of the overbought zone during the pullback, with the indicator still in the 50/70 area. Thus, reflecting bullish sentiment among traders.
On the four-hour and daily charts, the Alligator's MAs are headed upwards, which corresponds to the direction of the current upward cycle.
Outlook
In this situation, the number of short positions has decreased within the value of 1.2200. This slowed down the pullback. In order to receive a signal that indicates that the pound is recovering from its decline from February, the sterling should stay above the resistance level of 1.2300 for at least a four-hour period. Otherwise, the pullback will persist and eventually return the quote below 1.2150.
The complex indicator analysis unveiled that in the short-term, technical indicators are going back and forth due to the recent pullback. In the intraday and medium-term, indicators are providing an upward signal.
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