GBP/USD today's sharp drop from 1.2949 high could signal that the rebound has ended and that the sellers will take the lead. The pair has managed to rebound and recover in the short term as the US Dollar Index has slipped lower.
The Pound plunged as the UK's Final Manufacturing PMI dropped unexpectedly from 54.3 to 54.1 points signaling the expansion slowdown which is bad for the currency. The US is to release the ISM Manufacturing PMI later, the indicator could remain steady at 56.0 points.
The Unemployment Claims could drop to 850K in the previous week, while the Final Manufacturing PMI is expected to remain steady at 53.5 points. Overall, some good US figures could boost the greenback and the GBP/USD could resume its corrective phase.
The pair is stuck within a minor down channel, so the bias remains bearish despite the temporary rebound. The false breakout above the R1 (1.2913) and above the 1.2929 former high could announce a deeper drop.
The channel's downside line and 1.2647 level are seen as near-term support levels. The failure to approach and reach the median line (ML) in the most recent attempts could attract more sellers.
A bearish closure below the Pivot Point (1.2794) could signal further bearish momentum. As you already know from my analyses, GBP/USD could drop towards the 50% Fibonacci line (ascending dotted line) in the coming days.
- GBP/USD Trading Tips
Buy only another higher high, jump above 1.2949 today's high with an immediate target at the median line (ML) and at the R2 (1.3086).
You can sell the previous H4 bearish candle with a potential target at 1.2647 level. 1.2542 and the 1.2500 could be used as downside targets if GBP/USD extends its sell-off.
