You can pretty much see how much buyers in GBP/USD tried to force a move to the upside over the past two months. A retest of the December highs was their one and only shot and that came in January, before having to put plenty of effort in keeping price afloat 1.2000 by leaning on the key daily moving averages.
But things finally looked to have cracked yesterday, as the downside push amid a stronger dollar arguably breaking the resolve of cable buyers. The drop took out the January low 1.1840 as well and if price action keeps below that, it seems like we are more poised for a further pullback in GBP/USD next.
The dollar remains the key driver over the next two weeks, with markets more or less resigned to the fact that the BOE will only raise the bank rate by 25 bps next. As for the Fed, it will be a debate between 25 bps and 50 bps and that will ultimately also drag GBP/USD sentiment along with it.
For now, the technical break lower yesterday suggests that sellers are seizing back control and that the bias is turning more bearish. It's now over to whether or not the next set of US data and Fedspeak will vindicate that all before the blackout period begins after the end of the week.
