• The Pound Sterling has reached fresh bull cycle highs on US Dollar weakness. 
• GBP/USD bulls could be throwing in the towel below 1.2300, although 1.250 is also a near-term prospect. 

The US Dollar weakened to three-month-lows against the Pound Sterling on Thursday, after comments by Federal Reserve Chair Jerome Powell that US rate hikes could be scaled back "as soon as December". GBP/USD took on 1.2300 and is showing signs of exhaustion on the charts as the following illustrates: 

GBP/USD daily charts

The price has moved sharply away from the trendline support and has swept the liquidity, to some degree, above the early August highs. However, that is not to say that this rally is over and there are prospects of a move into the 1.2400 area of which would be expected to hold on initial tests and potentially cap the rally. 

GBP/USD H1 charts

However, at this juncture, there are prospects of a deep correction of the current bullish impulse towards 1.2150. On one hand, we could see a correction that moves progressively lower into the trendline support or price action that more resembles something like the following schematic: