This week, the GBP/USD pair began trading near 1.2400, which corresponds to significant resistance areas in late December and late January.
Coincidentally, the channel bottom on the hourly time frame is at 1.2400.
Do we have a decent chance to join the uptrend now?
The bulls are currently in control according to technical analysis as Stochastic is producing a positive divergence with prices of GBP/USD while remaining in the oversold region.
Focus on taking risks and a Fed pivot might possibly increase GBP/USD to the point where it jumps from 1.2400 to the psychological threshold of 1.2500 or even to the 1.2545 April highs.
However, the demand for GBP may also be influenced by UK inflation and labor market data indicators due this week.
The expectation is that consumer prices will begin to decelerate from their double-digit growth, while official pay statistics may point to a peak in wage inflation.
It would be simpler for GBP/USD traders to favor the USD in risk-averse trading conditions if the BOE were less hawkish. However, the increase in the GBP/USD price during the past hour may continue if favorable U.K. data provide some comfort.
For the time being, I'm starting to scale into a trend continuance by drawing signals from last week's risk-friendly trading environment.
With 1.2500 as the initial profit target and the prior inflection points of 1.2600 and 1.2650 as longer-term objectives, a long trade at the first indications of a rally would produce a good risk ratio.
