The GBP/USD rallies and is almost to reach another upside target where it could find temporary resistance again. Price increased aggressive as the dollar index plunges on the short term. A further USDX’s drop will force the greenback to lose more ground versus all its rivals, the index seems unstoppable on the short term after the false breakout above a dynamic resistance.

I’ve said in the last days that the USD needs strong support from the United States economy to be able to start a larger rebound, but unfortunately the lack of strong data has ruined the greenback. The Pound appreciated significantly even if the United Kingdom data failed to impress today, the Average Earnings Index remains steady at 2.5% in November, matching expectations, the Claimant Count Change was reported at 8.6K, much above the 2.3K estimate and above the 5.9K in the former reading period.

We’ll see what will happen after the United States data will be released, the Existing Home Sales are expected to decrease from 5.81M to 5.72M, the Flash Services PMI may increase from 53.7 to 54.5, while the Flash Manufacturing PMI could increase from 55.1 to 55.2 points.

The price rallied after the failure to stay below the second warning line (wl2) of the minor blue ascending pitchfork. The current upside movement is natural, we’ll see what will happen in the upcoming hours and if will have enough directional energy to make a valid breakout above the warning line (wl1).

A valid breakout will send the price towards the next upside target (150% Fibonacci line), only a false breakout above the wl1 followed by a retest will signal a minor drop on the short term. Technically, a minor correction is somehow expected after the impressive rally, this scenario will take shape only when the USDX will have enough energy to rebound after the massive drop. Only some very good US data could send the GBP/USD lower.