US Dollar Forecast: GBP/USD Susceptible to RSI Sell Signal

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By :  ,  Strategist

US Dollar Forecast: GBP/USD

GBP/USD gives back the advance from earlier this week to pull the Relative Strength Index (RSI) back from its highest reading this year, and data prints coming out of the US may influence the exchange rate as the Personal Consumption Expenditure (PCE) Price Index is anticipated to show sticky inflation.

US Dollar Forecast: GBP/USD Susceptible to RSI Sell Signal

Keep in mind, the recent rally in GBP/USD led to a break above the 2023 high (1.3143), but the exchange rate may continue to pullback from a fresh yearly high (1.3267) should the RSI fall below 70 to reflect a textbook sell signal.

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US Economic Calendar

US Economic Calendar 08282024

FOREX.com Economic Calendar

Looking ahead, the update to the US PCE, the Federal Reserve’s preferred gauge for inflation, may sway GBP/USD as both the headline and core rate are projected to increase in July.

Evidence of persistent price growth may generate a bullish reaction in the US Dollar as it limits the Federal Open Market Committee’s (FOMC) scope to pursue a rate-cutting cycle, but an unexpected downtick in the US PCE may produce headwinds for the Greenback as it fuels speculation for a material shift in Fed policy.

With that said, the British Pound may continue to outperform against its US counterpart as the 50-Day SMA (1.2860) reflects a positive slope, but a further decline in the exchange rate may pull the RSI back from oversold territory to indicate a textbook sell signal.

GBP/USD Price Chart –Daily

GBPUSD Daily Chart 08282024

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

  • GBP/USD may preserve the advance from earlier this week as it holds above the 2023 high (1.3143), with a break/close above 1.3310 (100% Fibonacci extension) opening up 1.3410 (78.6% Fibonacci retracement).
  • Next hurdle comes in around the March 2022 high (1.3438) but failure to hold above the 1.3140 (78.6% Fibonacci extension) to 1.3150 (23.6% Fibonacci extension) region may pull GBP/USD back towards 1.3010 (61.8% Fibonacci extension).
  • Next region of interest comes in around the 1.2900 (23.6% Fibonacci retracement) to 1.2910 (50% Fibonacci extension) followed by the 1.2760 (61.8% Fibonacci retracement) to 1.2830 (23.6% Fibonacci retracement) zone.

Additional Market Outlooks

Euro Forecast: EUR/USD Preserves Advance Following Fed Symposium

USD/JPY Rebounds Ahead of Monthly Low to Keep RSI Above 30

NZD/USD Rate Outlook: RSI Flirts with Overbought Territory

USD/CAD Falls Towards April Low as Fed Signals Policy Adjustment

--- Written by David Song, Strategist

Follow on Twitter at @DavidJSong

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