GBP/USD Price Analysis: Rebounds as bearish channel target achieved, Fed awaited

GBP/USD is hovering in the green zone for the first time in six trading days, bears seem to have faced exhaustion after a tumultuous week so far.

Cable is seeing fresh signs of life, helped by the return of risk appetite on upbeat Chinese activity data and as nervousness eases ahead of the expected 75 bps rate hike by the Fed.

In doing so, the currency pair extends the recovery towards 1.2050, adding 0.35% on the day, as of writing. The upbeat market mood has doused the ongoing rally in the safe-haven US dollar.

Additionally, investors resort to repositioning ahead of the critical Fed and BOE monetary policy decisions. The BOE Is widely expected to hike rates by 25 bps to 1.25% this Thursday, although the debate on the central bank’s rate hike path will hold the key for GBP bulls to sustain the recovery.

Looking at cable’s daily chart, a rebound seems to have some conviction as the price has already achieved the measured target of the rising channel breakdown at 1.1964.

The spot hit the lowest level since January 2020 at 1.1933 on Tuesday, having faced a double whammy from the aggressive Fed rate hike expectations and deepening fears about the future of the UK economy.

The Relative Strength Index (RSI) has now managed to come out of the oversold territory, trading at 30.71, backing the renewed uptick in GBP/USD.

Recapturing the 1.2050 psychological level is critical to unleashing the additional recovery towards 1.2100, above which doors will open up once again towards 1.2200.

GBP/USD: Daily chart

On the flip side, the immediate support now awaits at the 1.2000 round figure.

Fresh selling will see the channel target being tested again at 1.1964, below which the multi-month lows of 1.1933 will be back in focus.

GBP/USD: Additional technical levels