GBP/USD Price Stalls Gains in the Wake of Hawkish Fed

• The GBP/USD pair seems determined to approach and reach the 23.6% retracement level again.
• Testing and retesting the broken levels may announce a deeper drop.
• The fundamentals could change the sentiment during the week.

The GBP/USD price saw a significant fall from daily highs of 1.2065 during the earlier London session as the US dollar gathered traction ahead of Powell’s testimony.

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The pair is trading at 1.2002 at the time of writing. Fundamentally, the UK and US data came in better than expected yesterday. The US Factory Orders reported a 1.6% drop versus the 1.8% drop estimated, while the UK Construction PMI jumped from 48.4 points to 54.6 points above 48.7 points expected.

Today, the United Kingdom BRC Retail Sales Monitor and Halifax HPI came in better than expected. Later, the Fed Chair Powell Testifies is seen as a high-impact event and could really shake the markets.

The US Consumer Credit, Final Wholesale Inventories, and IBD/TIPP Economic Optimism data will also be released.

Tomorrow, the fundamentals should move the rate again. ADP Non-Farm Employment Change is expected at 197K in February versus 106K in January, while JOLTS Job Openings could drop from 11.01M to 10.55M.

In addition, the BOC and Fed Chair Powell Testifies should also have an impact. On Friday, the UK GDP and the US NFP could be decisive and change the sentiment.

GBP/USD price technical analysis: Sellers’ dominance below the channel

Technically, the GBP/USD pair moves sideways in the short term after breaking down the uptrend channel. Still, after its massive sell-off, we cannot exclude the probability of a temporary rebound. The price could return to test the broken levels before extending its sell-off.

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The 23.6% (1.1952) is a potential target if the rate continues to drop. The weekly S1 (1.1930) represented a downside obstacle as well. A larger downside movement can trigger if the price makes a valid breakdown through these levels.

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