On Wednesday, the Pound/Dollar (GBP/USD) fell by almost 80 points and reached the level of 1.3735. GBP/USD continued the sharp decline of the previous day from more than two-week highs.
The drop had no obvious catalyst and could only be attributed to some technical weakness in the British currency (GBP) caused by the continued recovery of the Euro/Pound (EUR/GBP) pair. The quotes fell to a four-day low and could not find support in the area of 1.3770. The prolonged correction in US treasury yields is not in favor of the US Dollar, but at the moment the pound looks even more vulnerable.
The UK services PMI unexpectedly declined in March. However, the change was minimal and would hardly have been able to provide a strong sell-off of the pound. The British currency (GBP) has been trading in the range against the Dollar (USD) for more than a month, and further dynamics remain as uncertain as possible. Forecasts for the recovery of the US and UK economies imply rapid growth during this year. At the same time, it is assumed that consumer inflation in the US will grow faster, and this will lead to an earlier increase in the Fed's interest rate.
In the trading forecast (signal), I expect a further decline in GBP/USD to the price value of 1.1675.