GBP/USD Forecast: RSI Attempts to Climb Out from Oversold Territory
British Pound Outlook: GBP/USD
GBP/USD continues to bounce back from a fresh monthly low (1.2111) to halt a six-day decline, and a move above 30 in the Relative Strength Index (RSI) may accompany a near-term rebound in the exchange rate like the price action from last year.
GBP/USD Forecast: RSI Attempts to Climb Out from Oversold Territory
GBP/USD snaps the series of lower highs and lows carried over from the previous week despite the ongoing rise in long-term Treasury yields, and data prints coming out of the US may lead to a larger rebound in the exchange rate as the Personal Consumption Expenditure (PCE) Price Index is anticipated to show slowing inflation.
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
US Economic Calendar
The core PCE, the Federal Reserve’s preferred gauge for inflation, is expected to narrow to 3.9% in August from 4.2% per annum the month prior, and evidence of easing price pressures may produce headwinds for the Greenback as it encourages the Fed to retain the current policy.
Nevertheless, a stronger-than-expected PCE report may drag on GBP/USD as it puts pressure on the Federal Open Market Committee (FOMC) to carry out a more restrictive policy, and Chairman Jerome Powell and Co. may continue to show a greater willingness to keep US interest rates higher for longer as inflation remains above the 2% target.
In turn, the outlook for GBP/USD may continue to evolve as the Bank of England (BoE) votes 5-4 to keep UK interest rates on hold, and the exchange rate may exhibit a bearish trend over the remainder of the year if it tracks the negative slope in the 50-Day SMA (1.2600).
With that said, GBP/USD may stage a larger rebound ahead of October as it snaps the series of lower highs and lows carried over from the previous week, and a move above 30 in the Relative Strength Index (RSI) may accompany a near-term rebound in the exchange rate like the price action from last year.
GBP/USD Price Chart –Daily
Chart Prepared by David Song, Strategist; GBP/USD on TradingView
- The head-and-shoulders pattern from earlier this year appears to have run its course as GBP/USD halts as six-day decline, and the bearish momentum may continue to abate as the Relative Strength Index (RSI) attempts to climb out of oversold territory.
- A move above 30 in the RSI may keep GBP/USD above 1.2090 (78.6% Fibonacci retracement), with a break/close above the 1.2300 (50% Fibonacci retracement) to 1.2390 (38.2% Fibonacci extension) region bringing the 1.2470 (50% Fibonacci retracement) to 1.2520 (23.6% Fibonacci extension) zone back on the radar.
- However, GBP/USD may struggle to hold its ground as long as the RSI holds below 30, with a break/close below 1.2090 (78.6% Fibonacci retracement) opening up the 1.1780 (50% Fibonacci extension) to 1.1840 (38.2% Fibonacci retracement) area, which incorporates the March low (1.1803).
Additional Market Outlooks
Australian Dollar Forecast: AUD/USD Range Breaks Down
EUR/USD Forecast: RSI Flirts with Oversold Zone Ahead of Euro Area CPI
--- Written by David Song, Strategist
Follow on Twitter at @DavidJSong
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.
GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2025