- The GBP/USD pair plunges as the Dollar Index has ended its corrective phase.
- The current up channel was seen as a downside continuation pattern.
- The descending pitchfork’s median line (ML) stands as a major target.
The GBP/USD forecast for the pair sees it plunging in the short term as the Dollar Index boosted the USD. The index ended its correction and now it looks to trade higher.
As you already know from my analysis, the Dollar Index was in a temporary, short-term corrective phase which was natural after its previous swing higher.
DXY’s rally forces the greenback to grow versus all its rivals and not only against the British Pound.
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Surprisingly or not, the British Pound lost significant ground versus the other major currencies even if the UK Retail Sales came in better than expected. The economic indicator registered a 0.8% growth in October versus 0.5% expected and after a 0.2% drop in September.
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Also, the Gfk Consumer Confidence was reported at -14 points versus -18 expected and compared to -17 in the previous reporting period. In addition, the Public Sector Net Borrowing was reported at 18.8B far above the 12.2B estimates.
Later today, Canada is to release its retail sales figures. You should be careful as the economic data could have a strong impact on the Dollar Index.
GBP/USD Forecast: Price Technical Analysis – Up Channel
The GBP/USD pair failed to stabilize above the 1.3483 level. It has only registered false breakouts with great separation above 1.3500 psychological level signalling that the upside movement could be over.
I’ve told you in a previous analysis that the currency pair could resume its rebound only as long as it stays within the ascending pitchfork’s body, above the lower median line (lml). You can see that the price has tested and retested the inside sliding line where it has found resistance.
The current up channel was seen as a downside continuation pattern. A valid breakdown below the lower median line (lml) could announce a downside continuation.
The descending pitchfork’s median line (ML) stands as a major downside target. Its failure to come back higher towards the upper median line (UML) signalled strong bearish pressure.
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