Early in the European session, the British pound (GBP/USD) is trading below the 21 SMA and the 200 EMA. We can see a strong bearish move due to Jerome Powell's speech. He said that the Fed is willing to speed up interest rate hikes.
GBP/USD fell more than 240 points from 1.2064 to 1.1819 in light of Powell's comments that the ultimate size of interest rates would likely be higher than previously anticipated. This increased risk aversion and investors sold the GBP, which generated a fall in the pair as seen on December 15, 2022.
According to the 4-hour chart, GBP/USD could continue its downtrend until it reaches the bottom of the downtrend channel formed since February 10. This level coincides with the 0/8 Murray line located around 1.1718 and could become significant support.
In case GBP/USD rebounds above 1.1840 in the next few hours, it is expected to reach the resistance that had formed around 1.1913 towards 1.1925. Once the price climbs to this zone, it will be seen as an opportunity to sell with targets 1.1840 and 1.1718.
Strong volatility is expected in the American session due to the fact that the results of the Fed meeting will be known. We must be careful because unexpected movements could occur. For this, we must locate the weekly support and resistance levels and the Murray levels as pivot points.
The British pound is expected to continue falling in the next few hours, so we could sell below 1.1840 with targets at 1.1778 and 1.1718. In case of a technical bounce above 1/8 Murray, we should wait for the pound to reach the daily pivot point at 1.1901 and take this as an opportunity to resume selling.
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