The GBP/USD pair dropped after failing to take out a strong resistance zone. It was traded at 1.1964 at the time of writing and it tries to violate the immediate downside obstacles. The currency pair dropped as the Dollar Index has managed to rebound and recover after its massive drop.
Fundamentally, the UK CPI came in higher than expected. The indicator reported a 9.4% growth versus 9.3% expected and compared to 9.1% in the previous reporting period. In addition, the Core CPI surged by 5.8% matching expectations. PPI Input and PPI Output came in better than expected.
Surprisingly or not, the USD remains bullish even if the US Existing Home Sales dropped from 5.41M to 5.12M below 5.37M estimates.
GBP/USD Plunged On Higher UK Inflation!
As you can see on the H1 chart, the rate challenges the uptrend line and the 1.1955 after registering only fasle breakouts above the weekly R1 (1.2020). The 1.2033 stopped the upside movement, so a new downside movement is favored.
Still, we need confirmation before taking action. The price could still register only false breakdowns through the uptrend line.
GBP/USD Forecast!
A new lower low, dropping and closing below 1.1955 could activate more declines and could bring selling opportunities with a potential downside target at the weekly pivot point (1.1890).
