GBP/USD Price Analysis: Bearish flag pattern spotted on 1-hour chart, BoE statement expected

• GBP/USD recovers early lost ground to an all-time low, though lacks follow-through.
• Bulls struggle to find acceptance above the 38.2% Fibo. level of the monthly downfall.
• The formation of a bearish flag pattern also warrants some caution for bullish traders.

The GBP/USD pair builds on its solid intraday recovery move from an all-time low and hits a fresh daily peak, around the 1.0930 region during the early North American session. Spot prices, however, retreat a few pips from highs and now seem to have stabilised around the 1.0900 round figure.

Expectations that the Bank of England will step in to stall the recent free-fall in the British pound triggered the initial leg of an intraday short-covering move around the GBP/USD pair. The US dollar, on the other hand, surrenders its early gains to a fresh two-decade high and offers additional support to the major.

From a technical perspective, the GBP/USD pair is seen struggling to find acceptance above the 38.2% Fibonacci retracement level of the steep decline from the monthly peak touched on September 13. Furthermore, the intraday recovery has been along an ascending channel, which constitutes the formation of a bearish flag pattern.

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

On the flip side, the 1.0900 mark now seems to act as an immediate hurdle ahead of the daily swing high, around the 1.0930 region. Any further recovery is likely to confront stiff resistance near the top end of the ascending channel, currently around the 1.0975 zone. This is followed by the 1.1000 mark, which if cleared decisively will suggest that the GBP/USD pair has formed a near-term bottom.

GBP/USD 1-hour chart

Key levels to watch