The GBP/USD dropped significantly today and has touched new lows, the yesterday’s gains have vanished as the USD was pushed higher by the USDX’s rebound. The US dollar index has increased a little today, is trading above the 100.50 psychological level, but remains under pressure after the yesterday’s impressive drop. Personally, I believe that the USDX will move sideways in the coming weeks, needs to recapture more bullish energy before will try to reach new highs.
The GBP/USD continues to move sideways as well on the daily chart, well have a clear direction only only when the rate will escape from the extended range.
The Cable has plunged today as the United States Retail Sales have disappointed in the European trading session, the sales have dropped by 0.3% in January, even if the currency traders have expected to see a 1.0% growth. The Retail Sales continue to drop after the 2.1% decrease from December, the poor data have forced the Cable to lose significant ground versus the USD, EUR and versus the Yen.
The currency pair is narrowing, has changed little in the last 10-days, but I hope that we’ll have a significant movement very soon, remains to see what will happen on the USDX, an increase will help the USD to drag the pair much lower.
You can see that the rate is trapped inside the extended sideways movement between the 1.2798 level and the 1.2089 static support, is narrowing right above the 50% Fibonacci line (descending dotted line), could be attracted by the lower median line (lml) of the minor ascending pitchfork after the breakdown the 50% Fibonacci line (minor ascending dotted line). You can see that the rate has tested the broken dynamic support and now could drop further.
Actually the rate could be attracted by the confluence area formed at the intersection between 50% Fibonacci line (descending dotted line) with the lower median line (lml) of the minor ascending pitchfork, is somehow expected to react this area after the false breakout above the median line (ml) of the ascending pitchfork.