GBP/US Price Analysis: Bearish pennant pattern on the 1 hour chart, awaiting BoE statement

• GBP/USD recovers lost ground to an all-time low, but lacks follow-through.
• The bulls are struggling to find acceptance above the 38.2% Fibonacci level of the monthly decline.
• The formation of a bearish pennant pattern also warrants some caution for the bulls.

The pair GBP/USD it is supported by its strong intraday recovery move from an all-time low and hits a fresh daily high around the 1.0930 area during the early North American session. The pair, however, pulled back a few points from the highs and now appears to have stabilized around the round 1.0900 level.

Expectations that the Bank of England would intervene to stem the recent free fall in sterling triggered the initial leg of an intraday short move around GBP/USD. The US dollar, meanwhile, gives back its early gains to reach a new two-decade high and offers additional support to the major currency.

From a technical point of view, the GBP/USD pair is struggling to find acceptance above the 38.2% Fibonacci retracement level of the sharp decline from the monthly high hit on 13th September. Furthermore, the intraday rally has occurred along an ascending channel, which constitutes the formation of a bearish pennant pattern.

Meanwhile, the oscillators on the daily chart remain in oversold territory and warrant some caution. This makes it prudent to wait for a convincing break below ascending channel support, currently around the 1.0765-1.0770 region, before positioning for a resumption of the recent downside move.

On the other hand, 1.0900 seems to be an immediate hurdle ahead of the daily high around the 1.0930 area. Any further recovery will likely face stiff resistance near the upper end of the ascending channel, currently around the 1.0975 area. This is followed by 1.1000, which if broken decisively will suggest that the GBP/USD pair has formed a short-term bottom.

GBP/USD 1 hour chart

Key levels to watch