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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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GBP/USD near year-to-date lows amidst worst week since August

Article By: ,  Head of Market Research
November 5, 2021 2:04 PM

 

Following the surprisingly cautious Bank of England (BOE) meeting earlier this week, 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:

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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