The GBP/USD pair accelerated its drop after failing to stay above the 1.2600 psychological level. In the short term, the pair rallied after the FOMC as the Dollar Index dropped, but the bias remained bearish.
Now, it's traded at 1.2344 after dropping by 2.48% from 1.2638 yesterday's high. As you already know, the FED increased the Federal Funds Rate from 0.50% to 1.00% as expected and it has confirmed further hikes in the upcoming meetings. Hawkish FOMC is bullish for the USD.
Today, the BOE increased its rate from 0.75% to 1.00% as expected. The MPC members voted unanimously for this decision versus the 8 to 1 vote expected. 3 members voted for a 50bps rate hike.
GBP/USD Massive Drop!
GBP/USD tried to rebound within an up-channel pattern. This formation was seen as a bearish continuation pattern. It has failed to reach and retest the channel's upside line and the median line (ml) signaling that the buyers are exhausted.
It has registered an aggressive breakdown through the channel's support and below the confluence area formed at the intersection between 1.2411 with the lower median line (lml). After its massive drop, GBP/USD could try to rebound a little.
GBP/USD Outlook!
The breakdown through the confluence area formed between 1.2411 with the lower median line (lml) signals a further drop. Coming back to test and retest the lower median line (lml) of the descending pitchfork and the 1.2411 could bring new selling opportunities.
1.2251 is seen as a potential downside target. It could approach and reach this level if it stays under the lower median line (lml).
