GBPUSD has stabilized around the two-month low of 1.2775 reached on Friday and according to Stochastics the downfall is already overstretched and hence a rebound might be around the corner. The RSI though has not violated its 30 oversold limit yet and the MACD continues to strengthen to the downside below its red signal line, a sign that things could deteriorate further before becoming better.
A leg lower and below Friday’s trough of 1.2775, would probably meet support at the 1.2660 bottom, the lowest level reached since June 2017. Even lower, bears would activate the long-term downtrend off 1.4375, resuming the bearish outlook. In this case the area around 1.2588, which provided some support to downside movements in June 2017, may come into focus before eyes turn to 1.2350, another frequently tested region in 2017.
Alternatively if the market proves oversold, a rebound could find immediate resistance around 1.2935, where the price stalled several times in previous months. Beating that mark, bullish actions may gain momentum towards 1.3042, taken from the high on August 30, while steeper increases may also challenge the 1.3200 barrier.
In the medium-term picture, GBPUSD holds neutral, ranging between 1.2660 and 1.3361.
To sum-up, the short-term bias looks negative, while in the medium-term the neutral outlook is still in place.
