FX.co ★ GBP/USD Upside Scenario Was Invalidated!

GBP/USD dropped aggressively and invalidated a potential larger growth. The pair was trapped within a down channel but its breakdown from this pattern signaled a bearish bias. The pair is trading at 1.3733 higher compared to 1.3725 today's low.

In the short term, we cannot exclude a temporary rebound. USD could still depreciate a little after the US Retail Sales dropped by 1.1% versus 0.2% expected, while the Core Retail Sales dropped by 0.4%, even if the traders had expected to see a 0.2% growth.

The pound sterling dropped today even if the UK Unemployment Rate dropped unexpectedly from 4.8% to 4.7%, while the Average Earnings Index increased by 8.8% versus 8.6% expected. Unfortunately, GBP has taken a hit from the Claimant Count Change, the indicator was reported worse than expected.

GBP/USD More Declines In View!

GBP/USD plunged after failing to reach and retest the channel's upside line. It has also failed to consolidate above the ascending pitchfork's 50% Fibonacci line. Now it is trying to break through the 1.3731 static support after ignoring the median line (ML).

Technically, GBP/USD could come back to test and retest the median line (ML) and the down channel's downside line before resuming its drop. On the downside, the 1.3700 psychological level is seen as an important target.

A temporary rebound could help us to catch a new downside movement. Right now is risky to sell it as GBP/USD could rebound.

Forecast!

GBP/USD could extend losses after escaping from the downward channel. A temporary rebound could help us to catch a new bearish signal. Technically, the major downside target is seen at the ascending pitchfork's lower median line (LML) after failing to consolidate above the upper median line (UML).