British Pound Talking Points
GBP/USD carves a series of lower highs and lows as it gives back the rebound from the monthly low (1.2075), and the exchange rate may continue to exhibit a bearish behavior as it snaps the April range.
Technical Forecast for British Pound: Bearish
The British Pound has depreciated against all of its major counterparts so far in May, and the weakness may persist over the remainder of the month as the recent decline in GBP/USD produces a break of the April low (1.2164).
The bearish development materialized following the string of failed attempts to clear the 200-Day SMA (1.2654), and GBP/USD may continue to retrace the advance from the yearly low (1.1410) as the break of the range bound price action signals a potential shift in market behavior.
However, the flat slope in the simple moving average offers a mixed outlook, with the Relative Strength Index (RSI) highlighting a similar as the oscillator fails to preserve the bearish formation from earlier this month.
GBP/USD Rate Daily Chart
Source: Trading View
GBP/USD carves a series of lower highs and lows following the failed attempt to push back above the 1.2300 (50% retracement) handle, with the move below the 1.2220 (23.6% expansion) to 1.2240 (61.8% expansion) region bringing the Fibonacci overlap around 1.2090 (38.2% retracement) to 1.2100 (61.8% expansion) on the radar, which largely lines up with the monthly low (1.2075).
A break/close below the overlap around 1.2090 (38.2% retracement) to 1.2100 (61.8% expansion) opens up the 1.1950 (78.6% expansion) region, with the next area of interest coming in around 1.1820 (23.6% retracement).
Will keep a close eye on the RSI even though it fails to preserve the downward trend from earlier this month as the oscillator develops a negative slope and appears to be making its way towards oversold territory.
— Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong