The GBP/USD plunged today and resumed the yesterday’s bearish candle. It has broken below a very strong dynamic support and now it should drop towards fresh new lows. Price dropped as expected on the Daily chart, I’ve said in the last week that the rate has shown some exhaustion signs. However, we still need a confirmation that we’ll have a larger drop in the upcoming weeks because this could be only a temporary drop.

The USDX seems motivated to jump much higher, but needs to be boosted by the United States economic data. The figures will shake the currency market, remains to see how the USD will react later because the fundamental factors will take the full control.

The UK’s Gfk Consumer Confidence dropped from -9 to -10 points, matching expectations, while the BRC Shop Price Index. On the other hand, the US Prelim GDP increased by 2.5% in the fourth quarter, matching expectations, while the Prelim GDP Price Index increased only by 2.3% in the Q4, less versus the 2.4% estimate and versus a 2.4% growth in the third quarter. The Chicago PMI may decrease from 65.7 to 64.2 points, while the Pending Home Sales could increase only by 0.4% in January, less versus the 0.5% estimate.

You can see that the rate has finally managed to make an aggressive breakdown through the second warning line (WL2) of the ascending pitchfork,  a valid breakdown will send the rate down again in the upcoming period. The next downside target will be at the second warning line (wl2) of the former major descending pitchfork.

Price it could come back to test and retest the broken warning line (wl2) of the ascending pitchfork before will drop further. A valid breakdown below the warning line (wl2) of the descending pitchfork will send the rate much deeper. the current drop is natural after the failure to reach and retest the 350% Fibonacci line (descending dotted line).