FX.co ★ GBP/USD: larger drop favored

The GBP/USD pair is trading in the red at 1.2874 at the time of writing and it seems determined to extend its sell-off. It has ended its temporary rebound and now it could hit new lows. Dollar Index's current rally forced the USD to take the lead versus its rivals.

You already know from yesterday's analysis that the greenback rallied, even though the US Housing Starts and Building Permits came in worse than expected. Today, the US Unemployment Claims indicator could be reported at 239K versus 237K in the previous week. Furthermore, the Philly Fed Manufacturing Index is expected at -10.0 points, Existing Home Sales could drop to 4.21M, while CB Leading Index may report a 0.6% drop. Positive US economic figures should boost the USD.

GBP/USD 1.2867 Key Support!

As you can see on the H1 chart, the rate failed to approach and reach the weekly pivot point of 1.2990 signaling strong downside pressure. Temporary rebounds are natural after its massive drop.

Now, it has dropped below the lower median line (lml) which represents dynamic support and it challenges the 1.2867 former low.

GBP/USD Outlook!

Dropping and closing below 1.2867 and under the S1 (1.2850) activates more declines. This scenario is seen as a selling opportunity. The warning line (wl1) represents a potential target.