The currency pair plunged after the BEO decision to hike the rate today. The USD has taken full control and has dragged the rate down on the short term. Price resumed the yesterday’s drop and now is pressuring a major confluence area, we’ll see what will happen because we may have a trading opportunity very soon. GBP/USD moves sideways on the short term, but it could start a larger move very soon.

Technically, it should drop further as the dollar index is trading in the buyer’s territory and should climb towards the 97 level in the upcoming weeks. The USD is strong as the Federal Reserve is expected to hike the rate in December.

The Cable plunged even if the UK’s Construction PMI increased from 48.1 points to 50.8 points, signaling that the expansion continues. The Bank of Englan has decided to increase the Official Bank Rate from 0.25% to 0.50%, matching expectations, but the traders weren’t impressed and have sold the Pound in the afternoon. The MPC members have voted by a majority of 7 to 2 for this decision, while the Asset Purchase Facility remained steady at 435B. The USD received a helping hand from the US Unemployment Claims, which have fallen to 229K in the previous week, even if the traders have expected to see an increase to 235K.

Price dropped after the false breakout above the 250% Fibonacci line and above the 1.3268 static resistance. Right now is pressuring the confluence area formed between the outside sliding line (SL) of the major descending pitchfork with the second warning line (wl2) of the minor ascending pitchfork.  A valid breakdown through the mentioned confluence area will accelerate the sell-off. I’ve said in the last weeks that the rate is expected to breakdown below the second warning line (wl2) if will reach it. A breakdown is imminent after the retest of the 250% Fibonacci line (ascending dotted line).

It could come towards the upper median line (UML) of the major descending pitchfork and towards the downside line of the ascending channel.