The dollar continued to lose ground, extending its downtrend from last week. Overall, it is clear that investors expect the Federal Reserve to start cutting interest rates next year. This is apparent as the U.S. Treasury sold 20-year bonds at a yield of 4.780% from 5.245%. It seems that the pound will continue to strengthen, as U.S. economic reports increasingly indicate a deteriorating situation. In particular, today's data on existing home sales is expected to fall 1.3%. It remains unclear when the dollar will stop falling.
Not only did the GBP/USD pair manage to recoup losses, but it also succeeded in breaching the resistance level of 1.2500. As a result, the price consolidated above this level. This led to the continuation of the upward cycle.
On the four-hour chart, the RSI upwardly crossed the 70 line. It is a signal of the pound's overbought conditions. However, it is not in the critical overbought territory, and the exchange rate may still continue to rise.
On the same chart, the Alligator's MAs are headed upwards, which corresponds to the current upward cycle.
OutlookThe bullish scenario suggests that GBP/USD will recover after a slump from mid-July to the end of September. However, if the market disrupts the upward cycle, and the quote settles below the 1.2500 mark, the pound may either temporarily weaken or enter a flat cycle.
The complex indicator analysis points to an upward cycle in the short-term, medium-term and intraday periods.