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Early in the European session, the British Pound (GBP/USD) is trading around 1.1367. It is forming a triple bottom between the lows of 1.1349, 1.1354, and 1.1356.
Since the beginning of the week, the market has been consolidating while waiting for the official announcement to be unveiled by the US Fed in the American session.
Investors are also waiting for the announcement from the Bank of England (BoE). The sterling is likely to trade with strong volatility in the next few hours and until the weekend.
According to the 4-hour chart, we can see that the British pound has been trading within a secondary downtrend channel since September 12 and is consolidating around the area of 1.1350.
A sharp break below the key level of 1.1350 could accelerate the decline of the GBP/USD pair towards the -2/8 Murray zone at 1.1230. Around this level, the lines of the secondary and main downtrend channels converge. A strong technical bounce could occur from the level of 1.1260 - 1.1230, thus suggesting a buying opportunity.
For the British pound to recover from the strong downward pressure, we should expect a sharp break above the 21 SMA located at 1.1408 and a close above the secondary bearish channel.
The information that will be published tonight regarding the Fed's monetary policy and the BoE's policy decision could offer strong movement. So, GBP/USD could leave the consolidation zone and thus determine the short-term trend.
Our trading plan for the next few hours is to buy the British pound above the 21 SMA located at 1.1408, with targets at 1.1474 and at the top of the main downtrend channel around 1.1640.
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