GBP/USD Forecast: downtrend channel intact ahead of UK retail sales

The GBP/USD pair continued with its good two-way price-action on Wednesday and remained within a well-established descending trend-channel formation on the hourly chart. The pair dropped to a fresh weekly-low after the latest UK consumer inflation (CPI) defied market expectations and held steady at an annualized rate of 2.4% in May, which failed to boost bets for an eventual BoE rate hike in the near-future. 

The pair did stage a solid bounce and peaked ahead of the 1.3400 handle in the pre-FOMC repositioning trade. The pair fell back to the 1.3300 neighborhood in a knee-jerk reaction to the anticipated hawkish rate hike announcement by the Fed but managed to rebound sharply as the US Dollar erased all of its euphoria gains. 

The pair built on overnight rebound through the Asian session on Thursday as investors now look forward to the UK monthly retail sales data, which would be seen as vital for August rate hike expectations. A stronger-than-expected rise in retail sales would keep the possibility of a BoE rate hike firmly on the table and provide a minor boost to the British Pound. 

The US economic docket also features the release of monthly retail sales data, which along with the release of usual initial weekly jobless claims will influence the USD price dynamics and produce some meaningful trading opportunities.

From a technical perspective, a decisive move beyond the descending trend-channel resistance, currently near the 1.3400-05 region has the potential to lift the pair towards June monthly tops, around the 1.3473, en-route the key 1.3500 psychological mark. 

On the flip side, weakness back below the 1.3365-55 immediate support might force the pair to head back towards challenging the trend-channel support near the 1.3300 handle. A breach below the mentioned support would signal a bearish shift and drag the pair towards 1.3240 support area, back closer to YTD lows set on May 29th.