GBPUSD has formed higher lows and higher highs connected by an ascending channel on its hourly time frame, and price is in correction mode at the moment.

The Fibonacci retracement tool shows that the 50% level lines up with the channel support around the 1.2750 minor psychological mark, as well as the 100 SMA dynamic inflection point. The 100 SMA is above the 200 SMA to signal that the path of least resistance is to the upside or that the uptrend is more likely to resume than to reverse.

A larger correction could reach the 61.8% Fib at 1.2723 near the 200 SMA dynamic support, which could be the line in the sand for a bullish pullback. In other words, a break below this could mean that a reversal is in order.

Stochastic is heading lower to show that there is some bearish pressure left, but the oscillator is also dipping in the oversold region to signal exhaustion among sellers. RSI has room to slide before reaching the oversold area, so the correction might keep going until it does.

Turning higher would confirm that buyers are returning, possibly taking GBPUSD back up to the swing high near 1.2800 and the channel top.

There are no major reports due from the UK today, leaving the pound selling off against the dollar, which has gotten a boost from stronger than expected CB consumer confidence data.

The Fed Beige Book is up for release next, and the performance of the Fed districts would likely impact the economic outlook and policy expectations. Improvements could underscore the central bank’s preference to keep borrowing costs higher for longer, which might mean more upside for the US currency, but weak results could revive expectations for three rate cuts this year.

On Thursday, the US preliminary GDP report is up for release and might have a stronger impact on dollar trends.