As of writing, Bank of England Governor Andrew Bailey and his key representatives and members of the Monetary Policy Committee, Huw Pill and Jonathan Haskel, are speaking at the UK Treasury Select Committee with a report on inflation. "We are concerned about the persistence of inflation, but we expect it to decline rapidly this year," Bailey said, but "we (in the Monetary Policy Committee) need to see more evidence of easing inflationary pressures."

Last week, the Bank of England raised interest rates by 0.50% at once, bringing it to a historical high of 4.0%. But despite this, the pound could not benefit much from this decision. Economists predict an inevitable economic downturn and recession for the UK. In this regard, they believe that the BoE next year, and maybe earlier, will go for policy easing in order to support the economy, despite high inflation.

Against the backdrop of the weakness of the U.S. dollar, the GBP/USD pair managed to correct from the recently reached local 5-week low at 1.1961 and come close to the key resistance level 1.2140 (200 EMA, 50 EMA on the daily chart).

In case of further growth and after the breakdown of the important short-term resistance levels 1.2160 (200 EMA on the 1-hour chart), 1.2185 (200 EMA on the 4-hour chart), GBP/USD will head towards the important medium-term resistance level 1.2230 (50 EMA on the weekly chart).

Despite the price's attempts to break into the zone above the local resistance level 1.2440 in the past two months, the downward dynamics of the pair still prevails. Therefore, it is logical to assume a rebound from the resistance levels 1.2160, 1.2185 and the resumption of decline. A breakdown of the support level 1.2055 will strengthen the downward dynamics of GBP/USD, and a breakdown of the local support level 1.1842 (2023 lows) will confirm the resumption of the global downward trend of the GBP/USD.

In an alternative scenario, GBP/USD will continue to rise towards the key resistance levels 1.2730 (144 EMA on the weekly chart), 1.2890 (200 EMA on the weekly chart). The first and fastest signal for the resumption of long positions will be the breakdown of the short-term resistance level 1.2160, and the confirmation signal will be the breakdown of the important resistance level 1.2230.

Support levels: 1.2100, 1.2055, 1.2000, 1.1842, 1.1160, 1.0940

Resistance levels: 1.2140, 1.2160, 1.2185, 1.2200, 1.2230, 1.2300, 1.2400, 1.2440, 1.2500, 1.2600, 1.2730, 1.2800, 1.2900

Trading scenarios

Sell Stop 1.2120. Stop-Loss 1.2190. Take-Profit 1.2100, 1.2055, 1.2000, 1.1842, 1.1160, 1.0940

Buy Stop 1.2190. Stop-Loss 1.2120. Take-Profit 1.2200, 1.2230, 1.2300, 1.2400, 1.2440, 1.2500, 1.2600, 1.2730, 1.2800, 1.2900