The GBP/USD pair climbed as much as 1.2424 today. Now, it has retreated and is located at 1.2387 at the time of writing. The bias remains bearish, so more declines are in cards despite temporary rebounds.
Fundamentally, the rate came back down even if the US data came in mixed today. Building Permits jumped unexpectedly from 1.44M to 1.54M but Housing Starts dropped from 1.45M to 1.28M below 1.44M expected. Also, the Canadian CPI reported higher inflation.
Tomorrow, the UK CPI is expected to report a 7.0% growth versus 6.8% growth in the previous reporting period. Still, don't forget that the FOMC could change the sentiment even if the Federal Funds Rate remains at 5.50%. On Thursday, the BoE should deliver a 25 bps hike. So, the fundamentals should move the rate in the upcoming days.
GBP/USD trading in the red
Technically, the GBP/USD pair is trapped between 1.2410 and 1.2370 levels. It has registered only a false breakout from this range signaling exhausted buyers.
Also, its failure to reach and retest the downtrend line, announced strong downside pressure. Still, more declines need confirmation.
GBP/USD forecast
A new lower low, a bearish closure below 1.2370 could announce more declines. This could bring new short opportunities as the rate could target the S1 (1.2320).
On the other hand, a valid breakout above the downtrend line and a new higher high indicates a new leg higher and invalidates a larger drop.
