- The GBP/USD pair is bullish as long as it stays above the 61.8% retracement level.
- Stabilizing above the median line (ML) could announce potential upside continuation.
- Only a new lower low could activate a larger downside movement.
Our GBP/USD forecast notes that the pair rebounded in the short term after being in a correction. Now, it’s trading at 1.3659 level at the time of writing above 1.3599 today’s low.
In the short term, the pair is fighting hard to resume its upwards movement as the Dollar Index reaches a dynamic resistance. The DXY failed to confirm further growth, so the USD could lose ground versus its rivals.
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Fundamentally, the British Pound is bullish after higher inflation reported by the United Kingdom yesterday. The CPI rose by 5.4% versus 5.2% expected, while the Core CPI raised by 4.2% compared to 3.9% expected. Today, the RICS house Price Balance was reported at 69% matching expectations.
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The USD drops at the time of writing as the US Existing Home Sales dropped unexpectedly lower from 6.46M to 6.18M far below 6.42M expected, while the Unemployment Claims climbed from 231K to 286K, even if the specialists expected a potential drop to 227K.
Tomorrow, the UK Retail Sales could report a 0.6% drop while the Gfk Consumer Confidence is expected to remain steady at -15 points. The US CB Leading Index and the Canadian retail sales data could move the USD.
GBP/USD Forecast: Price Technical Analysis – Corrective Phase
The GBP/USD pair found support on the 61.8% retracement level and now it has jumped above the median line (ML). It challenges the weekly pivot point (1.3650). A valid breakout above this upside obstacle and stabilizing above the median line (ML) could signal that the downside movement ended.
On the other hand, failing to stay above the median line (ML) could signal that the downside movement is far from being over.
Still, a larger downside movement could be activated only by a new lower low, by a valid breakdown below the 61.8% retracement level. In the short term, a temporary decline was expected after its amazing leg higher. The bias remains bullish as long as it stays above the 61.8% even if the price comes back to test and retest it.
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