GBPUSD recently fell through support at the 1.3800 handle and has since dipped to a low of 1.3575. Price has pulled up from this area to retest the broken support.

This area of interest is holding as resistance so far, and a break below the short-term consolidation could confirm that a drop to the bearish targets would follow. The Fibonacci extension tool shows the levels that sellers could be aiming for.

The 38.2% level is at 1.3656 then the 50% level is at 1.3616. Stronger selling pressure could take GBPUSD down to the 61.8% level that lines up with the swing low or the 76.4% level at 1.3526. The full extension is at 1.3446.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that resistance is more likely to hold than to break. The 100 SMA also recently held as dynamic resistance on the pullback from the drop.

Stochastic is already heading down from the overbought zone to confirm that sellers are ready to take over now that exhausted buyers are taking a break.

The dollar has a number of catalysts coming up this week, including the FOMC decision and US advanced GDP release. No actual policy changes are expected from the Fed, but any slight shift in Fed head Powell’s stance towards tapering soon might be bullish for the US currency.

Also the advanced GDP for Q2 is slated to show even stronger growth than the previous quarter. If that’s the case or if the actual figure beats the consensus, the dollar could be in for a strong rally.

The core PCE price index due much later in the week could also be worth watching since this is the Fed’s preferred inflation measure. Stronger price pressures could be enough reason for the central bank to start reducing stimulus soon, although they did reiterate that they’d like to see evidence of stronger hiring first.