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GBP/USD is trading around 1.2562, recovering after falling towards 2/8 Murray around 1.2457, the lowest since May 20th. The rise is being helped by a generalized weakness in the US dollar which is retreating after reaching 102.03 in the European session.
According to the 1-hour chart, we can see a downtrend channel that has been going on since May 26. If the pound fails to break this channel in the next few hours, GBP/USD is likely to make a technical correction towards the SMA 21 located at 1.2502.
The psychological level of 1.2500 could offer a technical bounce to the British pound and the instrument could resume its uptrend and reach 3/8 Murray at 1.2573. The pair could even reach 4/8 Murray and 1.2695.
In case the pound fails to settle above 1.2502 (21 SMA), a technical correction is likely to follow and the price could reach the 2/8 Murray support zone around 1.2451. This strong bottom could provide a technical bounce and will be the last chance for the pound to maintain its bullish bias.
On the contrary, to resume the uptrend, the pound should consolidate on above 1.2573 on the daily chart which could be a positive sign. So, the price could reach 1.2660 (the high of May 27) and even 1.2695 (4/8 Murray).
As long as the GBP/USD pair continues to trade within the downtrend channel on the H1 chart, the British pound is likely to oscillate within this channel and could fall towards the support zone at 1.2502 and as low as 1.2460.
Our trading plan for the next few hours is to sell below the 200 EMA on the 1-hour chart around 1.2553, with targets at 1.2502 and 1.2460. Conversely, buy if the pound consolidates above 1.2573 with targets at 1.2630 and 1.2695. The eagle indicator is giving a positive signal, which opens the door for the recovery of the pound in the coming days.
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