- The US data should bring high action in GBP/USD.
- The selling pressure is high after taking out the uptrend line.
- A new lower low activates a larger drop.
The GBP/USD price slumped today, trading at 1.2384 while writing. It has ended its temporary rebound and seems determined to approach new lows.
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Yesterday, it climbed as high as 1.2467 as the USD was punished by the US data. Unemployment Claims, Philly Fed Manufacturing Index, Existing Home Sales, and CB Leading Index came in worse than expected.
Still, the USD rallied today as the DXY seems oversold. Fundamentally, the British Pound was punished by the UK Retail Sales indicator which reported a 0.9% drop versus the 0.5% drop estimated and after the 1.1% growth in the previous reporting period.
In addition, the UK Flash Services PMI dropped from 47.9 to 46.6 points even if the specialists expected a potential growth to 48.3 points.
Later, the US data should have a big impact on the GBP/USD pair. Flash Manufacturing PMI may drop to 49.0 points from 49.2 points signaling further contraction, while Flash Services is expected at 51.5 points. The Canadian retail sales figures could have an impact on the USD as well.
GBP/USD Price Technical Analysis: Massive Drop
The GBP/USD pair found resistance at the 1.2472. It has failed to reach the upper median line (uml) signaling exhausted buyers. It has taken out the uptrend line and now it looks very heavy.
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Better than expected US data later today should push the pair to new lows. The descending pitchfork’s median line (ml) is seen as a potential target. A larger drop could be activated by a valid breakdown below this dynamic support.
Technically, the rebound was natural after its last drop. As you can see on the hourly chart, the rate failed to stay above the 1.2525 indicating that the upwards movement ended.
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Saqib Iqbal
