GBP/USD dropped aggressively today because the Dollar Index has rebounded. The pair is traded at the 1.3679 level far below 1.3750 yesterday's high. Unfortunately, the UK Gfk Consumer Confidence dropped further from -8 to -13 points, though traders have expected to see a potential growth to -7 points.
In addition, CBI Realized Sales was reported lower at 11 points versus 35 expected and compared to 60 points in the previous reporting period. Fundamentally, the USD remains strong after the hawkish FED and despite some poor data reported yesterday from the US economy.
Today, the New Home Sales indicator has come in better than expected which may have a positive impact on the US Dollar.
GBP/USD failed to approach and reach the Ascending Pitchfork's median line (ml) signaling strong pressure. Now, it has found temporary support on the weekly S1 (1.3662). The Ascending Pitchfork's lower median line (lml) is seen as support as well.
Technically, the pair is trapped between the 1.3891 and 1.3602 levels. Personally, I want to see a strong bullish pattern around the current levels or lower on the lower median line (lml) to consider going long.
Yesterday's rebound was only a temporary one. GBP/USD is likely to move sideways in the short term before really developing a strong move up or down.
Testing and retesting the lower median line (lml) could signal potential growth. The pair may still increase as long as it stays within the Ascending Pitchfork's body. The level of 1.3602 is seen as critical support, so only a valid break below it may signal a further downside movement.
A false breakout with great separation below the lower median line (lml) or a major bullish engulfing printed on this line may bring new long opportunities.