FX.co ★ GBP/USD deeper drop in cards

The GBP/USD pair rebounded in the short term but the bias remains bearish. The currency pair could test and retest the immediate upside obstacles before going down. Technically, the price action signaled that the rebound ended, so a downside continuation is in cards.

The downside pressure remains high as the Dollar Index reached a support zone. In the short term, the British Pound could try to rebound as the UK data came in better than expected. The Current Account was reported at -7.3B above -18.5B expected, Final GDP rose by 1.3% versus 1.0% estimates, Nationwide HPI registered a 1.1% growth exceeding the 0.5% growth forecasted, while the Revised Business Investment surged by 1.0%.

Though, better than expected data reported by the US Core PCE Price Index, Chicago PMI, and by Unemployment Claims could lift the USD.

GBP/USD Temporary Growth!

GBP/USD found support on the ascending pitchfork's lower median line (lml) signaling a potential rebound. Now, it has tested and retested the median line (ml) which stands as a dynamic resistance.

Also, it has retested the 1.3160 static resistance, registering only a false breakout. The pair could drop as long as it stays below these immediate resistance levels.

GBP/USD Outlook!

In the short term, we cannot exclude the median line (ml) and 1.3160 - 1.3194 area retest. New false breakouts above these levels could announce a new leg down and could bring new short opportunities.

Only a valid breakout above the 1.22 psychological level and above the median line (ml) could invalidate a larger drop.