GBP/USD plunges within a down-channel pattern. USD is strongly bullish in the short term as the Dollar Index has managed to jump higher again after ending its minor retreat. Also, the greenback has received a helping hand from the US data today.
The PPI increased by 1.0% beating the 0.6% estimate, while the Core PPI increases by 1.0% exceeding the 0.5% growth expected. Furthermore, the Unemployment Claims dropped from 387K to 375K in the previous week matching expectations.
On the other hand, the Pound was weakened by some poor UK data. The Industrial Production dropped by 0.7% even though specialists have expected to see a 0.3% growth. The Manufacturing Production increased by only 0.2% versus 0.4% expected. The Construction Output dropped by 1.3% versus a 1.1% growth expected, while the Goods Trade Balance dropped further from -9.6B to -12.0B.
GBP/USD Trading In The Red
GBP/USD failed to reach and retest the 1.3894 weekly pivot point or the downtrend line, signaling a strong bearish trend. It is traded below the weekly S1 (1.3831) level and it could approach the channel's downside line soon.
GBP/USD could resume its drop as long as it stays within the descending channel's body. It is traded back below the ascending pitchfork's 50% Fibonacci line.
The median line (ML) could attract the price after its failure to move towards the upper median line (UML). Technically, only a valid upside breakout from this downward channel could indicate a new leg higher and could bring new long opportunities.
Forecast
A minor consolidation here followed by a valid breakout through the downtrend line could signal that GBP/USD could develop an important upward movement. The immediate support is seen around the 1.38 psychological level.
