The currency pair dropped sharply today an reached fresh new lows, but failed to stay there and now is almost to erase today’s losses. Price resumed the bearish momentum and dropped through a major confluence area. It remains to see what will really happen till the end of the day, but I want you to know that a false breakdown through the mentioned confluence area will signal a reversal.

Right now is premature to talk about a larger rebound as long as the rate remains under massive selling pressure, so we have to wait for a fresh trading opportunity before we take action.

The Pound increased aggressively before the BOE, but failed to resume the bullish momentum and now is trading in the red on the short term again. The Cable received strong support from the United Kingdom Retail Sales, which have increased by 0.8% in the previous month, beating the 0.4% estimate, the indicator increased again after the 0.2% drop in the previous reporting period.

The Bank of England decided to maintain the Official Bank Rate unchanged at 0.50%, matching expectations, the MPC members voted by a majority of 7 to 2 for this decision, even if the specialists have expected to see a unanimous vote. The Asset Purchase Facility remains unchanged at 435B, matching expectations.

The rate dropped through the confluence area former between the 61.8% retracement level with the  sliding parallel line, a false breakdown will signal a reversal.  However, a valid breakdown through the mentioned confluence area will signal a further drop, and maybe the price will accelerate the sell-off.

You should know that a failure to close near the sliding line will signal an oversold and a potential bounce back. You should stay away for now hoping that we’ll have a fresh trading opportunity very soon.