Prior to the Bank of England's monetary policy decision on Thursday, the pound had fallen to its lowest level in three months.

The interest rate market believes that the probability of a 25 basis point (bp) increase in cash interest rates to 5.50% is approximately 80%, the highest level since before the 2008 financial crisis.

If the central bank's tightening rate exceeds 25 basis points, which surprises the market, the pound may start to fluctuate.

GBP/USD Technical Analysis Snapshot

GBP/USD hit a low of 1.2379 on Friday and closed near that level, but did not test potential support for the low of 1.2369 in early June.

So far on Monday, the index has stabilized, but it may become fragile after closing below the 200 day Simple Moving Average (SMA).

The 200 day moving average may provide resistance before breakpoints 1.2445, 1.2550, and 1.2620. On top of this, the previous peaks of 1.2746, 1.2800, and 1.2819 may constitute resistance.

The resistance level may also be located near the high point of the psychological level of 1.3000, which is consistent with the historical breakpoint.

Going further up, the 16 month high of 1.3142 is also slightly lower than some breakpoints in the 1.3150-1.3160 area, which may provide a resistance zone.

The bearish triple moving average (TMA) requires prices to be lower than short-term SMA, which is lower than medium-term SMA, and medium-term SMA is lower than long-term SMA. All SMAs also need to have a negative gradient.

When observing any combination of 10 day, 21 day, 55 day, and 100 day SMA, the TMA criteria have been met and may indicate that the bearish trend is evolving.

The support position may be located at previous low points and breakpoints 1.2369, 1.2308, 1.2270, 1.2148, 1.2011, and 1.1804.