The GBPUSD currency pair reached a short-lived high for the 2014 calendar year last week before a correction in the market occurred. Alan Collins from 3c Analysis expects this sharp correction to continue and is targeting lower levels for GBPUSD.

A bearish inverted hammer pattern on the weekly candle charts was created as the market’s sentiment changed and prices fell. Alan notes that this downward momentum is only expected to be temporary, but is targeting lower levels at USD 1.6819 and USD 1.6793.

The Bank of England’s Inflation Report out later today adds an element of risk to today’s trade depending on Governor Mark Carney’s outlook on growth and inflation. The Bank of England’s report could have a significant impact on the currency pair’s direction. Any potential rally may be limited though by last Friday’s Marabuzo line and 13 day moving average, which have already demonstrated an ability to cap recent buying trends.

An overnight close above USD 1.6903 would negate this trade.

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