- The bias is bearish. A new lower low activates more declines.
- The GBP/USD pair could approach and reach new lows as long as it stays under the minor downtrend line.
- The FOMC Meeting Minutes could really shake the markets later today.
After yesterday’s massive drop, the GBP/USD price tried to rebound in the short term. However, the bias remains bearish. It was trading at 1.1037 level at the time of writing, far below 1.1179, yesterday’s high.
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The price recovered as the US dollar slipped lower after its strong leg higher. Fundamentally, the UK Unemployment Rate, Average Earnings Index, and BRC Retail Sales Monitor came in better than expected yesterday. On the other hand, the Claimant Count Change reported worse than expected data.
Today, the United Kingdom GDP reported a 0.3% drop versus the 0.0% growth expected. Manufacturing Production reported a 1.6% drop, more compared to the 0.1% drop estimated, while Industrial Production dropped by 1.8% even though the specialists forecasted only a 0.1% drop. In addition, the Index of Services and Goods Trade Balance came in better than expected, while Construction Output reported worse than expected data.
The bias remains bearish. Only the US data could change the sentiment. The PPI is expected to report a 0.2% growth, while Core PPI may register a 0.3% growth. The FOMC Meeting Minutes represent a high-impact event, and most likely, it will shake the markets.
GBP/USD price technical analysis: Downside leg in play
From the technical point of view, its failure to stay above the descending trendline signaled exhausted buyers and a potential sell-off. Dropping below the ascending trendline resulted in a larger drop. The bias is bearish as long as it stays under the minor descending trendline. The 1.0931 stands as a downside obstacle, as a critical support level.
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A new lower low activates more declines and brings short opportunities. Only failing to make a new lower low followed by a valid breakout above the minor downtrend line may announce that the retreat ended and that the GBP/USD pair could try to develop a new leg higher. After its strong rally, a downside movement was natural. It remains to be seen how large the sell-off will be. The weekly S2 (1.0770) and the S2 (1.0490) represent downside obstacles.
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