GBP/USD technical analysis: Cable charts bullish continuation pattern ahead of the Fed

• GBP/USD created a bullish outside bar candlestick on Tuesday, signaling a continuation of the recent rally.
• Federal Reserve is expected to cut rates by 25 basis points.

GBP/USD is struggling to clear 100-day moving average (MA) resistance a day after charting a bullish continuation pattern. 

GBP/USD created a bullish outside bar candlestick on Tuesday, signaling a continuation of the recent rally from lows below 1.20. 

Federal Reserve is expected to cut rates by 25 basis points. The decision will be announced at 18:00 GMT. 

The pair hit a high and low of 1.2527 and 1.2392 on Tuesday, engulfing the previous day's price action. 

Essentially, GBP/USD created a bullish outside bar candlestick pattern on Tuesday, invalidating indecision signaled by Tuesday's bearish inside bar candlestick and signaling a resumption of the rally from the Sept. 3 low of 1.1958. 

So far, however, the pair has failed to find acceptance above the 100-day moving average (MA) of 1.2498. 

That said, an upside break looks likely, as the bullish outside bar candle is backed by upward sloping 5- and 10-day moving averages (MAs) and an above 50-reading on the 14-day relative strength index. The daily moving average convergence divergence histogram is also reporting bullish conditions. 

The outlook would turn bearish if the pair closes below Tuesday's low of 1.2392. A bearish daily close could be seen if the US Federal Reserve (Fed) keeps rates unchanged or cuts rates by 25 basis points but downplays the need for another rate cut before the year-end. 

It is worth noting that the odds of a 25 basis point rate cut were 50/50 on Tuesday.

Daily chart

Trend: Bullish

Technical levels