GBP/USD traded mostly sideways during last month; the first half was pretty volatile as this pair moved 400 pips up and down a few times, but the volatility decreased towards the end of the month. This month has been less volatile, but the trend has been clear; the price broke below 1.29 last week as the USD was attracting some bids.

But towards the end of the week we saw this pair form a bullish reversing chart setup. The price formed a doji daily candlestick which is a reversing signal after the bearish move all this month. The stochastic indicator was oversold too, so a retrace higher was overdue.

The next four daily candlesticks look pretty bullish, especially yesterday’s candlestick. Today, the bullish momentum is still going and this pair has climbed around 50 pips so far, as traders expect the FED to be slightly dovish. But they are still being cautious. Although, they have taken out the 100 SMA (red) and are heading for the 50 SMA (yellow) above.

But, I think that the 200 SMA (purple) will be the reversing point. That moving average has provided resistance before in January and again at the beginning of this month. So, I think that that’s the target, which will likely be reached today if the FED sounds dovish indeed. But despite how dovish the FED sounds, GBP/USD traders won’t have the guts to stay bullish for too long on this pair due to Brexit.