Following a correction to the 1.2300 area, GBP/USD reversed its direction and advanced toward 1.2350. Although Wall Street's main indexes are trading mixed on Tuesday, the US Dollar stays on the back foot and helps the pair gather bullish momentum.

GBP/USD adds to Tuesday’s decline and probes the area of 3-day lows in the 1.2045/40 band midweek on the back of the acute move higher in the greenback, which appears propped up by increasing risk aversion in the global market.

Indeed, the bearish mood among investors remains on the rise following fears over the European banking system, all exacerbated in response to negative news from Swiss lender Credit Suisse.

From a technical perspective Cable is in a broad sideways market consolidation that began at the start of the year. Within this range – which has a floor at 1.18 and cieling at around 1.2450 – GBP/USD has oscillated in four clear waves. The current wave is bullish in character and began at the 1.1802 March 8 lows. The short-term trend is bullish, therefore, and biased to extend given the absence of any reversal insignia. The Relative Strength Index (RSI) on the daily chart has not yet reached overbought, further suggesting the pair has more upside to come, and may well reach the range highs eventually.

The lower limit of the ascending regression channel is located at 1.2300. If the pair falls below that level and starts using it as resistance, an extended downward correction toward 1.2240 (50-period Simple Moving Average (SMA) on the four-hour chart) and 1.2200 (psychological level, static level) could be witnessed.

If the pair stays within the ascending channel by holding above 1.2300, it needs to clear 1.2330 (static level) to target 1.2360 (mid-point of the ascending channel).

Bullish potential to override GBPUSD after a correction

Mar 28 2023