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GBP/USD Selloff Pushes RSI Up Against Oversold Zone

Article By: ,  Strategist
November 21, 2024 9:26 PM

British Pound Outlook: GBP/USD

GBP/USD falls to a fresh monthly low (1.2576) as it gives back the advance from the start of the week, with the recent selloff in the exchange rate pushing the Relative Strength Index (RSI) up against oversold territory.

GBP/USD Selloff Pushes RSI Up Against Oversold Zone

GBP/USD extends the drop from the weekly high (1.2715) even though the UK Consumer Price Index (CPI) showed a rise in both the headline and core reading for inflation, and a move below 30 in the RSI is likely to be accompanied by a further decline in the exchange rate like the price action from earlier this year.

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In turn, GBP/USD may continue to give back the advance from the advance from the May low (1.2446) as it starts to carve a series of lower highs and lows, and the UK Retail Sales report may keep the exchange rate under pressure as the update is anticipated to show a decline in household consumption.

UK Economic Calendar

 

UK Retail Sales are expected to contract 0.3% in October after expanding 0.3% the month prior, and indications of a slowing economy may push the Bank of England (BoE) to further unwind its restrictive policy as Governor Andrew Bailey acknowledges that ‘inflation has come down faster than we expected a year ago.’

With that said, the bearish price series in GBP/USD may lead to a further decline over the remainder of the week, but the RSI may show the bearish momentum abating should the oscillator hold above 30.

GBP/USD Price Chart –Daily

Chart Prepared by David Song, Strategist; GBP/USD on TradingView

  • GBP/USD falls to a fresh monthly low (1.2576) after struggling to trade back above the 1.2710 (23.6% Fibonacci extension) to 1.2760 (61.8% Fibonacci retracement) region, with a breach below 1.2540 (78.6% Fibonacci retracement) opening up the May low (1.2446).
  • Next area of interest comes in around 1.2390 (38.2% Fibonacci extension) but lack of momentum to push the Relative Strength Index (RSI) below 30 may indicate a potential exhaustion.
  • Need a close above the 1.2710 (23.6% Fibonacci extension) to 1.2760 (61.8% Fibonacci retracement) region to bring 1.2820 (38.2% Fibonacci extension) on the radar, with the next area of interest coming in around 1.2900 (23.6% Fibonacci retracement) to 1.2910 (50% Fibonacci extension).

Additional Market Outlooks

USD/JPY Weakness Curbs Threat of Currency Intervention

US Dollar Forecast: AUD/USD Recovery Keeps Yearly Range Intact

USD/CAD Rally Unravels to Pull RSI Back from Overbought Zone

Gold Price Recovery Keeps RSI Above Oversold Zone

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

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