- The GBP/USD pair moves sideways in the short term, a valid breakout from this formation could bring great opportunities.
- A new lower low, a downside breakout could announce a deeper drop.
- Only a valid breakout above the downtrend line could announce that the downside is limited.
Our GBP/USD forecast sees the pair moving sideways in the short term. It’s traded at 1.3528 level at the time of writing. The bearish pressure remains high after failing to make a new higher high or to take out the immediate resistance levels.
Technically, the currency pair could make new lows if the Dollar Index resumes its growth. The DXY edged higher on Friday on some rumours regarding the geopolitical tensions between Russia and Ukraine.
Also, the greenback could try to resume its appreciation as the Federal Reserve is expected to hike rates as the inflationary pressure continues to grow.
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Tomorrow, the United Kingdom is to release the Unemployment Rate which is expected to remain steady at 4.1%. Furthermore, the Claimant Count Change is expected at -36.2K, while the Average Earnings Index could report a 3.8% growth.
The volatility could be high, the GBP/USD pair could register sharp movement around the US economic data publication. The PPI could register a 0.5% growth, the Core PPI is expected to rise by 0.4%, while the Empire State Manufacturing Index could be reported at 11.9 points versus -0.7 points in the previous reporting period.
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GBP/USD Forecast: Price Technical Analysis – Range
As you can see on the H4 chart, the currency pair failed to stabilize above the downtrend line signaling exhausted buyers and a potential deeper drop. 1.3504 stands as an important static support. A valid breakdown below this level could open the door for a larger downside movement.
In the short term, it’s trapped between the 23.6% retracement level and the 1.3504. Escaping from this range pattern could bring great opportunities.
In my opinion, only staying above the 1.3504 and making a valid breakout above the downtrend line could announce that the downside is limited. After its false breakouts above the 23.6% (1.3610), the price action signaled strong bearish pressure, but only a new lower low could activate a larger drop.
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