GBP/USD is ready to make a false high before going down!

The GBP/USD exchange rate fluctuates in a narrow channel just above 1.2700 on Monday. The rebound of the major pair is supported by a positive risk environment. However, the increasing tension in the Red Sea could increase demand for safe-haven assets and limit the upside potential of the pair. GBP/USD experienced a rebound in the second half of the previous week, erasing a large portion of its weekly losses. However, the short-term technical outlook for the pair has yet to show an accumulation of bullish momentum as it holds steady around 1.2700 in the European morning on Monday. The rally in the U.S. Dollar (USD) exerted bearish pressure on GBP/USD last week. The improved risk sentiment towards the end of the week, as reflected in the significant rally in Wall Street's main indexes, weakened the USD and paved the way for a decisive rebound in the pair. However, investors remain uncertain about the timing of a Federal Reserve (Fed) policy shift ahead of key U.S. growth and inflation data this week. The CME FedWatch tool shows that the probability of a 25 basis points rate cut in March has decreased from 70% earlier in the month to about 50%. U.S. stock index futures are trading positively in the European session. I expect a strong rally from the short but intense bullish channel that could take the price to the supply zone at 1.2750, bouncing off the downtrend trendline. Currently, the current session is relatively calm, with focus on the BOJ; we will see if they have the courage to raise rates and bring them above zero, I hope so. It requires a shock to the market and, principally, to the yen. Greetings and happy trading to everyone from Nicola.