GBP/USD Challenges 1.3700 Psychological Level On Mixed US Data

• The GBP/USD pair jumped above strong upside obstacles, so further growth is favoured.
• Confirming its breakout above the median line (ml) could bring fresh opportunities.
• The pair could drop only if the breakout is invalidated.

The GBP/USD pair is strongly bullish in the short term as long as the Dollar Index keeps falling.

As you already know, the greenback plunged versus its rivals after higher inflation reported by the United States. Actually, the Dollar Index was at resistance, so a temporary decline was somehow expected after showing exhaustion.

Yesterday, the British Pound received a helping hand from the Uk Industrial Production which raised by 0.8% versus 0.2% expected, while the Manufacturing Production registered a 0.5% growth in August versus 0.0% estimated. 

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Right now, the GBP/USD pair has slipped lower only because the Dollar Index has rebounded. The USD was lifted by better than expected US Unemployment Claims. The economic indicator was reported at 293K in the previous week far below 315K expected and compared to 329K in the previous reporting period.

Unfortunately for the USD, the PPI registered only a 0.5% growth in September versus 0.6% growth expected, while the Core PPI indicator reported a 0.2% growth compared to 0.5% forecasts. 

Don’t forget that the US is to release its retail sales data tomorrow. The volatility could be high around these publications.

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GBP/USD Forecast: Price Technical Analysis – Upside Reversal

From the technical point of view, the GBP/USD pair stands at 1.3707 level above the ascending pitchfork’s median line (ml). The aggressive breakout above 1.3675 former high signalled strong buyers and an upside continuation in the short term.

Actually, its valid breakout through the first warning line (wl1) of the descending pitchfork, the pair was expected to turn to the upside and to develop a strong leg higher. Stabilizing above the median line (ml) of the ascending pitchfork may validate further growth ahead.

Personally, I would like to see a valid breakout also above the weekly R2 (1.3726) level before considering going long. You should know that invalidating the breakout through the median line (ml) could announce a potential decline towards 1.3673 or down to 1.3647 level. 

If it stays above the median line, the GBP/USD pair could climb towards the upper median line (uml) in the medium term.

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