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GBP/USD Near Year-To-Date Lows After Worst Week Since August

By Matthew WellerForexNov 07, 2021 12:15AM ET
www.investing.com/analysis/gbpusd-near-yeartodate-lows-after-worst-week-since-august-200607537
GBP/USD Near Year-To-Date Lows After Worst Week Since August
By Matthew Weller   |  Nov 07, 2021 12:15AM ET
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Following the surprisingly cautious Bank of England (BOE) meeting this past week, the pound sterling is in freefall.

Looking at GBP/USD in particular, the pair is falling nearly 200 pips from Monday’s open, which would mark its worst week since August. More importantly, cable is approaching its year-to-date low at 1.3412; the last time the pair traded below that level was two days before last Christmas.

As the chart below shows, the pair is not yet oversold on its 14-day RSI indicator, despite the sharp drop so far this week. This suggests that rates could still fall further in the coming days, though after such a dramatic move, it wouldn’t be surprising to see a quick bounce of profit-taking ahead of the weekend:

GBP/USD Daily Chart
GBP/USD Daily Chart

Source: TradingView, StoneX

Regardless, it’s clear that GBP/USD bears have the upper hand in the short term. A confirmed break below 1.3412 in the coming days could open the door for a continuation lower, with little in the way of previous support until the 38.2% Fibonacci retracement of the entire 2020-2021 rally down below 1.3200. At this point, only a sharp reversal above the October highs in the 1.3800 area would erase the near-term bearish bias.

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GBP/USD Near Year-To-Date Lows After Worst Week Since August
 

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GBP/USD Near Year-To-Date Lows After Worst Week Since August

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