The GBP/USD has decreased significantly in the latest days and now is approaching an important dynamic support, any drop below this level will open the door for more declines, the bearish momentum could attract more sellers as the medium term outlooks remains bearish, the price wasn’t able to harm the downtrend. The price has increased a little in yesterday’s trading session, but the price is erasing yesterday’s gains and could reach the Monday’s low, the Cable has taken a hit from UK economic data, the United Kingdom Manufacturing Production has increased only by 0.1% in March, less compare to the 0.4% estimate, however the manufacturing production has managed to increase again after the 0.9% drop from February. The UK’s Industrial Production has disappointed as well because has increased only by 0.3% in March even if the forecast was 0.7%, the production has jumped higher again as the indicator has registered a 0.2% drop in February.
The US dollar in waiting for a bullish spark from the US economy, the US dollar index has managed to rebound and has jumped above a major dynamic resistance, the index has retreated in this morning to test the broken resistance level, a rejection will send the index higher, the greenback will increase again after a short retreat.
We may have high volatility on the GBP/USD at the end of the week as the United Kingdom and United States will publish high impact economic data that most likely will bring high action, you’ll have to be careful because the fundamental factors will drive the price. The Bank of England is to release the Official Bank Rate tomorrow, the rate is expected to remain on hold at 0.50% as the MPC members are expected to vote unanimously for this decision. The Monetary Policy Summary and the BOE Inflation Report could bring high volatility.
You can see that the price has found strong resistance at the upper median line of the medium term descending pitchfork, has failed to retest the median line of the short ascending pitchfork and now is very close to hit the lower median line of the ascending pitchfork. The GBP/USD has failed once again to escape from the descending pitchfork’s body, the sentiment remains unchanged as long as the price is trading below the upper median line (UML). The current retreat was expected because the price has closed much below the median line of the ascending pitchfork, the first target is at the lower median line (lml), any drop below this level could change the sentiment on the short term, the perspective remains bullish as long as the price is trading inside the ascending pitchfork’s body.
The medium term perspective remains bearish also because the price has failed to close above the 1.4669 horizontal resistance, the buyers weren’t strong enough to consolidate the gains above the 1.4565, so the price could drop even deeper in the coming period.
The price is trading right above the lower median line (lml), could drop even below this level to reach and retest the sliding parallel line, which represent a critical dynamic support, the pair could retest also the 50%Fibonacci line in the coming days if the US dollar index will manage to resume the short term rebound.