It is currently positioned sideways and could remain trapped within a certain range until tomorrow's US inflation data or even Friday's UK GDP report.
During these events, traders and investors can learn more about future interest rates determined by the Bank of England (BoE).
The Bank of England currently maintains a somewhat hawkish stance, but if GDP data reveals a contraction and signals a possible recession, the Bank of England may need to revise its views.
In such a scenario, investors could speculate on a rate cut rather than anticipating “higher for longer” rates, leading to a potential drop in the pound against the dollar.
Examining the Elliott wave pattern, there appears to be a triangle underway, possibly with wave E seeking support around the 1.2650 area.
However, for the bullish sentiments to regain strength, the breakout of the wave D high is crucial. Additionally, deeper support and a more complex wave (4) could be found in the 1.25-1.2550 range.
If the cable breaks down and remains bearish after the US CPI and UK GDP economic data is released, then I would leave it aside for the moment and focus more on the bearish.
