GBPUSD has formed lower highs connected by a falling trend line that’s been holding since the start of August. Price looks due for another test of resistance soon.

The Fibonacci retracement tool shows that the 61.8% level lines up with the trend line at the 1.3900 major psychological mark and a former support zone. This is also near the 200 SMA dynamic inflection point, which adds to its strength as resistance.

On the subject of moving averages, the 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse.

Stochastic is heading lower after reaching the overbought zone, confirming that sellers are taking over while exhausted buyers take a break. RSI also looks ready to move south after coming close to the overbought region.

The UK GDP is up for release in the upcoming London session, and a stronger growth figure of  4.8% is eyed to follow the earlier 1.6% contraction. A higher than expected GDP reading might be bullish for the pound since this would remind traders that BOE policymakers are leaning closer to tightening policy soon.

Meanwhile, the dollar is under downside pressure after the downbeat CPI release. The headline reading slipped from 0.9% to 0.5% as expected while the core figure fell from 0.9% to 0.3% versus the projected 0.4% figure.

This underscores the Fed’s view that inflation is transitory and that they are not likely to withdraw stimulus anytime soon. The PPI report is up for release next, and analysts are projecting a slower 0.6% rise for the headline figure and a 0.5% uptick for the core version.

Weaker than expected results might once again weigh on the US currency, possibly leading to a GBPUSD break higher. If that’s the case, a reversal from the slide could follow.