FX.co ★ GBP/USD: downside stopped by 1.3 psychological level

The GBP/USD pair rebounded today after registering a new fasle breakdown below the 1.3 psychological level. The price is fighting hard to rebound, but the bias remains bearish. It could drop deeper anytime as the Dollar Index is bullish.

Fundamentally, the UK data came in mixed today. The GDP rose by 0.1% less compared to 0.2% expected, Industrial Production registered a 0.6% drop even if the traders expected a 0.3% growth, while the Manufacturing Production dropped by 0.4% versus the 0.3% growth forecasted. In addition, the Index of Services rose by 0.8% beating the 0.7% estimatesGoods Trade Balance was reported at -20.06B versus -16.8B forecasts, while the Construction Output dropped by 0.1% versus a 0.5% expected.

GBP/USD Bearish Bias Intact!

Despite some poor economic data, the British Pound has managed to push the pair above the 1.3050 level. Still, if the Dollar Index continues to grow, the GBP/USD could slip lower. Technically, as long as it stays under the descending pitchfork's upper median line (UML), the pair could resume its downside movement.

A deeper drop could be activated by a valid breakdown below the 1.3 psychological level. 1.29 and the median line (ML) are seen as potential downside targets.

GBP/USD Outlook!

The pair could extend its downside movement if it drops and stabilizes below the 1.3000. Moving sideways above this level, registering only false breakdowns could signal that the downside movement is over.

A great short opportunity could appear if the GBP/USD pair comes back to test and retest the upper median line (UML).