GBP/USD was trading in the red at 1.3524 at the time of writing. The price action showed exhausted buyers and signaled a potential deeper drop. In the short term, it little changed as the DXY seems overbought.
Fundamentally, the UK data came in mixed on Friday. Tomorrow, the Unemployment Claims is expected to remain unchanged at 4.1%, while the Average Earnings Index could report a 3.8% growth. On the other hand, the US PPI is seen as a high-impact indicator and is expected to register a 0.5% growth, while the Core PPI may register a 0.4% increase.
GBP/USD upside invalidated
GBP/USD registered only false breakouts above the 23.6% (1.3611) retracement level and above the downtrend line signaling that the upwards movement ended. Still, 1.35 psychological level represents a downside obstacle. A valid breakdown below this level and a new lower low could activate a potential strong drop.
It moves somehow sideways between the 23.6% retracement level and 1.35. Also, its failure to reach and retest the ascending pitchfork's median line (ML) indicates exhausted buyers.
GBP/USD outlook
A valid breakdown below 1.3504 static support could announce more declines. Failing to make a new lower low followed by a valid breakout above the downtrend line could signal potential growth.
Personally, I would like to see a new false breakout above the downtrend line before developing a strong downside movement.
