- The GBP/USD pair could drop towards the 61.8% retracement level after dropping below the channel’s support.
- The lower median line (LML) of the ascending pitchfork stands as a major downside target.
- The bias remains bearish as long as it stays under the channel’s downside line.
The GBP/USD forecast sees the pair extend its downside movement as the Dollar Index has managed to hit new highs today. It’s traded at 1.3452 level at the time of writing above 1.3444 today’s low. Technically, the bias remains bearish in the short term as the price ignores strong downside obstacles.
Still, in the short term, the currency pair could rebound and recover a little after the current massive drop and after poor US data reported earlier today.
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The price could come back to test and retest the immediate resistance levels before dropping deeper. A temporary rebound could help the sellers to catch a new bearish momentum.
Fundamentally, the UK and US data came in worse than expected today, so the GBP/USD pair remains bearish. The United Kingdom Flash Services PMI was reported at 53.3 below 53.9 estimates, while the Flash Manufacturing PMI dropped from 57.9 to 56.9 far below 57.7 expected.
Surprisingly or not, the USD remains strongly bullish even if the US Flash Manufacturing PMI was reported at 55.0 versus 56.9 expected while the Flash Services PMI dropped unexpectedly lower from 57.6 to 50.9 points below 54.9 forecasts signaling a strong slowdown in expansion.
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GBP/USD Forecast: Price Technical Analysis – Corrective Phase
The GBP/USD pair challenges the 50% (1.3454) and the weekly S2 (1.3452) level. A valid breakdown may announce more declines. As you can see on the H4 chart, the rate dropped below the channel’s downside line signaling that we could have a larger corrective phase.
You knew from my analyses that the GBP/USD pair could develop a strong downside movement if it stabilizes below the ascending pitchfork’s median line (ML). Technically, the 61.8% (1.3385) represents a major downside obstacle if the price drops deeper.
This level could stop the current sell-off. As long as it stays under the channel’s downside line, the pair could drop deeper also towards the ascending pitchfork’s lower median line (LML). This scenario could take shape only if the DXY extends its upwards movement.
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