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The GBP/USD pair plunged after reaching the 1.2500 psychological level. Now, it's trading at 1.2397 at the time of writing. The rebound seems over, the price action could activate more declines soon. The pair dropped also because the Dollar Index has managed to rebound.
Fundamentally, the UK CPI rose by 9.0% in April versus 9.1% estimates but it was reported above 7.0% growth in March, while the Core CPI surged by 6.2% matching expectations. In addition, HPI came in line with expectations, PPI Output and RPI came in better than expected, while the PPI Input reported worse than expected data.
Earlier, the US data came in mixed. The Housing Starts dropped from 1.73M to 1.72M even if the traders expected to see a potential growth to 1.75M, while the Building Permits came in at 1.82M above 1.81M estimates.
The GBP/USD pair failed to stay above the 61.8% (1.2453) retracement level and now it challenges the 50% (1.2396) and the weekly R1 (1.2390). Closing and stabilizing below these levels could confirm a further drop.
In the short term, a temporary rebound was somehow expected after escaping from the Falling Wedge pattern. Still, don't forget that the rebound could be only a temporary one. The bias remains bearish despite temporary rebounds.
A new lower low, dropping and closing below 1.2371 today's low could activate more declines toward the 1.2300 psychological level.
It could rebound only if it stays above the 50% (1.2396) retracement level.
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