After making a strong selloff from the 1.5250 minor psychological resistance and previous week highs, GBP/USD found support around the 1.5100 major psychological level. 

The pair appears to be retracing, thanks to the recent disappointments in U.S. economic data.

The pair seems to be encountering short-term resistance at the 38.2% Fibonacci retracement level, which is close to the 1.5150 minor psychological mark. However, stochastic is in moving out of the oversold region, suggesting a potential move up.

Take note though that the BOE is scheduled to make its interest rate decision during today’s London session and possibly highlight the weaknesses in the British economy. If that’s the case or if they hint at further asset purchases later on, GBP/USD could stage another strong selloff, possibly below the previous lows.

Note that there’s a double top formation on the 1-hour time frame, which suggests a reversal of the recent uptrend. The neckline is located around 1.5100 and a strong break below this area would confirm the start of a downtrend. This could carry on until the previous lows near 1.4850.

By Kate Curtis from Trader’s Way