GBP/USD plunged as the dollar Index managed to increase in the short term. The pair has turned to the downside after failing to reach the 1.4 psychological level. GBP/USD could drop deeper as long as the DXY resumes its growth.
The dollar is strongly bullish ahead of the US inflation data which will be released on Wednesday. In the short term, GBP/USD is bearish. The current H4 candle may signal further decline.
The pound failed to resume its growth after the BOE event, so we'll have to wait for the current decline to end before searching for new long opportunities.
GBP/USD Sell-Off
GBP/USD failed to stabilize above the ascending Pitchfork's upper median line (UML). Now it is pressuring the upside 50% Fibonacci line after retesting the weekly pivot point (1.3894).
It has tested and retested the upper median line (UML) finding strong resistance and supply. Technically, GBP/USD is developing a potential down channel or a flag, which could be considered an upside continuation pattern.
Dropping and stabilizing below the S1 (1.3831) may signal a deeper decline towards 1.38 and down to the median line (ML).
Forecast
After breaking the last H4 candle, GBP/USD could drop deeper. It has moved sideways in the short term below the upper median line (UML), so the downside breakout may signal more declines.
The median line (ML) is seen as the next major downside target. Only a bullish pattern could signal a new swing higher.
