GBP/USD bounces back as it waits on crucial monetary decisions

The GBP/USD pair has been bouncing back as it waits on the decisions of the Bank of England and the Fed to tighten monetary policy. The Bank of England has already raised the rate to 0.25% and there are plans for more hikes, which would add strength to the British pound. However, a potential rate hike from the Fed could cause a decline and a repeat of the test of support at the 1.3200 level. A potential fall would occur after January 26, when the Fed will hold a meeting to confirm a potential rate hike decision in March.

The Bank of England will hold their own meeting on February 3rd and could raise their rate again which will help the Pound to get out of the descending triangle and go to rest resistance around 1.4200. UK inflation figures came in hotter than expected which could force the Bank to act. There is additional resistance from the MA200 which intersects with the dynamic resistance of the downtrend.