GBPUSD has been on a downtrend ever since the BOE showed a bit of hesitation when it comes to tightening monetary policy by the end of the year. Price has broken below a support area around the 1.6850 minor psychological level and has traded near the 1.6750 handle.
From there, price bounced up for a retracement, possibly until the broken support zone. This lines up with the 50% Fibonacci level, but it looks like the 38.2% level is holding for now. Stochastic is already moving down towards the oversold area, indicating that selling pressure might fade soon.
A higher pullback could last until the 50% Fibonacci level and the resulting selloff could take the pair back to its previous lows at 1.6750 or lower. Take note that the UK claimant count change and BOE inflation report are up for release today and this might determine the longer-term direction of the pound.
By Kate Curtis from Trader’s Way.