Yesterday, the GBP/USD continued to rise on the 1-hour chart after a rebound from the Fibonacci retracement level of 127.2% at 1.2112. Then the price settled firmly above the 1.2238 level. The new ascending trend channel proves that the current market sentiment is bullish. The pair may rise up to the level of 1.2342. If the quote settles below 1.2238, traders may expect the pair to decline towards the lower line of the ascending channel.

On Wednesday evening, the results of the FOMC meeting will be released. Markets expect the US regulator to make a quarter-percentage-point rate hike. The same is true about the Bank of England. However, it has become clear over the past few days that traders expect a more aggressive move from the Bank of England. I doubt that the UK regulator will raise the rate by 0.50%. It could be that the market actually expects the Fed to pause. In this case, with a rate hike of 0.25% tomorrow evening, the US dollar may gain strong ground since traders have been factoring in a different scenario. Anyway, I expect to see a surge in trading activity on Wednesday and Thursday, and the British pound may act unpredictably. The market dynamics will depend on Jerome Powell's and Andrew Bailey's rhetoric. It is always hard to predict how the central banks' meetings will turn out. In the meantime, the pound sterling is rising, which is also confirmed by technical charts. Yet, the situation may change drastically tomorrow or the day after tomorrow. Today, the information background is light. Yet, it was the same yesterday which did not stop bull traders from developing momentum.

On the 4-hour chart, the pair advanced to the Fibo retracement level of 127.2% at 1.2250, closing slightly above it. However, we can see that the MACD indicator is developing a bearish divergence. It may result in a reversal of the pair in favor of the US dollar. If so, the pair may start to decline towards the level of 1.2008. If the bearish divergence is canceled, then the price may head upwards to 1.2441.

Commitments of Traders (COT)

Economic calendar for US and UK:

On Tuesday, the economic calendars in the UK and the US are both uneventful. Therefore, the fundamental background will have zero influence on traders today.

GBP/USD forecast and trading tips:

It is possible to go short on the pound if the price closes below 1.2238 or 1.2250 with the targets at 1.2112 and 1.2007. Buying the pound will be possible after a rebound from 1.2007, considering a rise toward 1.2112, 1.2238, or 1.2250. All these targets have been reached. The next target is seen at 1.2342.