GBP/USD Price Fades Spike Above 1.23 After BoE’s 25-bps Hike

• The GBP/USD pair turned to the downside after registering only false breakouts through the R2.
• The BOE should be decisive today.
• The Rising Wedge pattern could be activated after a valid breakdown below the uptrend line.

The GBP/USD price dropped in the short term and is trading at 1.2287 at the time of writing. The price marked a fresh monthly high near the mid-1.2300 area.

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Fundamentally, the USD extended its depreciation after the FOMC. As expected, the Federal Reserve increased the Federal Funds Rate from 4.75% to 5.00%. The Fed could continue hiking rates if inflation continues to grow. However, the Fed has already hinted at a potential pause in the hike cycle.

Today, the Bank of England has increased the Official Bank Rate from 4.00% to 4.25%. As you already know, the UK CPI rose by 10.4% in February versus the 9.9% expected, while Core CPI surged by 6.2% exceeding the 5.7% growth estimated. So, higher inflation forces the BOE to take action.

In addition, the US Unemployment Claims could jump from 192K to 198K in the last week. The current Account should climb to -213B from -217B, while New Home Sales indicators may drop from 670K to 650K.

GBP/USD Price Technical Analysis: Sell-off

Technically, the GBP/USD pair found resistance above the weekly R2 (1.2320) and turned to the downside. As you can see on the hourly chart, the price registered only false breakouts above this upside obstacle.

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The price action developed a potential Rising Wedge pattern. Still, the downside reversal formation is far from being confirmed. The uptrend line and the weekly R1 (1.2250) represent strong downside obstacles.

You can see a descending pitchfork on the chart. The upper median line (uml) represents a dynamic resistance, while the median line (ml) is a potential target and obstacle. Technically, only a valid breakdown below the uptrend line could activate a larger downside movement. Testing the uptrend line may announce a new bullish momentum.

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