A week ago, the pound sterling began falling without any pauses. As a result, it reached local oversold levels and was expected to rebound. However, yesterday, the British currency was stagnant. The fact is that the pound sterling is still significantly overbought.
It jumped approximately by 500 pips after the BoE’s meeting. It means that the recent decline was a pullback after such a considerable rise. Thus, the currency even failed to inch up.
Nevertheless, today, the pound sterling has every chance to gain in value amid the US statistical reports. Forecasts for the US unemployment claims are entirely negative. The number of first-time claims may increase by 2K, thus remaining almost at the same level.
However, the number of continuing claims may surge by 91K, showing a significant jump. Such figures reflect serious deterioration in the US labor market situation. This is a purely negative factor that may prevent the US dollar from further growth.
Meanwhile, the pound/dollar pair returned to the level of 1.3600. A drop in the British pound corresponds to the correction that is quite possible amid such a high overbought level. Although the pair is falling, it is still within the structure of the uptrend. However, the situation may change if the correction turns into the initial phase of a downward movement.
On the daily chart, the RSI technical indicator is moving in the upper area, thus proving that the uptrend still prevails in the market. The Alligator indicator also points to the uptrend. The signal is proved by the absence of intersections between moving averages.
On the daily chart, we still see a signal about a change in the mid-term trend. To prove the signal, the quote should consolidate above 1.3850.
Outlook
Under the current conditions, the pound/dollar pair may stagnate near 1.3600. The levels of 1.3590 and 1.3655 may act as intermediate limits of the range. Meanwhile, to continue sliding, the pair just need to fix below the 38.2 Fibonacci level. In this case, the price is likely to drop to 1.3450.
In terms of the complex indicator analysis, we see that technical indicators are signaling mixed opportunities on the short-term and intraday periods amid the current stagnation. In the mid term, technical indicators are providing buy signals.