The GBP/USD pair plunged in the last hours as the Dollar Index rallied. DXY's upside continuation could force the USD to dominate the currency market. It was trading at 1.1619 at the time of writing and it seems very heavy in the short term.
As you already know, the pair is strongly bearish after the US JOLTS Job Openings and the CB Consumer Confidence came in better than expected yesterday. Today, the UK BRC Shop Price Index rose by 5.1% versus the 4.4% expected but it has failed to save the Pound from selling.
Later, the US ADP Non-Farm Employment Change could be decisive. The economic indicator could be reported at 300K above the 128K forecasts. Tomorrow, the ISM Manufacturing PMI and the Average Hourly Earnings, Unemployment Rate, and NFP on Friday could really shake the markets.
GBP/USD Challenges 1.1621 Key Support!
The GBP/USD pair retested the downtrend line and now it has dropped below the 1.1621 former low. It remains to see if it will be able to validate its breakdown. After today's sell-off, we cannot exclude a temporary rebound.
Still, as long as it stays below the downtrend line, GBP/USD could extend its downside movement. Technically, the weekly S2 (1.1600) represents a downside obstacle as well.
Only staying above this downside obstacle and making a valid breakout through the downtrend line may signal that the downside movement ended and that the GBP/USD pair could develop a new bullish momentum.
GBP/USD Forecast!
Making a valid breakdown below the 1.1600 psychological level may activate a downside continuation and could bring new short opportunities.
