The GBP/USD pair is trading in the red at 1.3054 at the time of writing. The price action signaled exhausted buyers but a larger correction is far from being confirmed. Despite poor economic data, the Dollar Index is fighting hard to rebound. DXY's bounce back should force the USD to appreciate versus its rivals.
Fundamentally, the US Retail Sales reported a 0.2% growth versus 0.5% growth expected, while Core Retail Sales increased only by 0.2%, less versus the 0.4% growth forecasted. Furthermore, Capacity Utilization Rate came in at 78.9% versus 79.5% expected, while Industrial Production dropped by 0.5% even if the traders expected a 0.0% growth.
Tomorrow, the UK CPI is expected at 8.2% versus 8.7% in the previous reporting period. Lower inflation could weaken the Pound.
GBP/USD Overbought Signs!
As you can see on the H1 chart, the rate failed to reach and retest the 1.3140 static resistance and now it has dropped below the median line (ml) which represents a dynamic support.
Now, it challenges the 1.3044 former low. This stands as a critical downside obstacle. Stabilizing below the median line (ml) may announce a larger correction.
GBP/USD Outlook!
Dropping and closing below 1.3044 activates more declines and is seen as a selling signal.
