The GBP/USD has decreased sharply in the Friday’s trading session, but the price has recovered a little, the buyers have pushed the price higher, the price has jumped higher also because the USDX has retreated today. Remains to see what will happen till the end of the day, but if the price will close somewhere near today’s high, then we could have another leg higher in the coming days. The USDX could weaken the greenback if will correct further, the index maintains a bullish perspective on the short to medium term as the rate is trading above the 94.38 horizontal support. The GBP/USD has decreased aggressively on Friday after the Retail Sales data was released, the retail sales have increased surprisingly higher, have surged by 1.3%, while the Core Retail Sales have increased by 0.8%, exceeding the 0.6% estimate. The greenback has edged higher after the release of the Prelim UoM Consumer Sentiment, the indicator has increased from 89.0 to 95.8 points.
The price is retesting the lower median line (lml) of the ascending pitchfork, actually has jumped above this level and now is fighting hard to close above this broken obstacle. The current price retreat was expected after the failure to close above the upper median line (UML) of the descending pitchfork, the perspective is bearish on the medium term, the price may drop further on the short term if the lower median line will hold. The GBP/USD will become strongly bearish if will drop below the sliding parallel line, the price has failed to retest this level today, another leg higher could develop only if the price will close and stabilize above the lower median line of the ascending pitchfork.
The price has increased significantly also because the US economic data has come worse, the Empire State Manufacturing Index has fallen unexpectedly, the economic indicator has dropped from 9.6 to -9.0 points, has reached the lowest level of the last 3-months, the traders have expected a drop only to 7.2 points. The bad data has weakened the greenback, the NAHB Housing Market Index has remained the same at 58 points, has come below the 59 forecast.
We could have significant action on the GBP/USD in the coming days as the US and UK will release some important economic data, the FOMC Meeting minutes could bring high volatility on Wednesday.
You can see on the H4 chart that the price has jumped above the lower median line of the ascending pitchfork, we’ll have to wait to see if will close above this level, a retest of the lower median line followed by an increase will open the door for more increase in the coming hours. The pair could surge again on the short term as the price has found strong support much above the sliding parallel line, only a drop below this level will attract more sellers. Looks like that the price is losing bearish momentum, is located much above the 50% Fibonacci line (descending dotted line) and maintains a bullish perspective on the short term if the US dollar index will retreat in the next days.