On August 28th, market analyst Gary Howes stated that the pound is lifting its overbought status and may further decline in the short term; However, in the coming weeks, the overall situation is still favorable for an upward trend.

On Tuesday, the GBP/USD briefly hit a 29 month high of 1.3266, although no significant news affecting the market was released. Subsequently, the exchange rate experienced a decline and is currently trading around 1.3209.

For the past three days, the relative strength index of GBP/USD has consistently exceeded 70, which technically makes the pound overbought. The relative strength index rarely stays above 70 for a long time, and if the exchange rate falls or begins to consolidate, it may fall back.

This process is ongoing, and without any significant news, the magnitude of the callback will be difficult to quantify.

JPMorgan analyst Jeremy Stretch said, "Given the overbought nature of the GBP/USD, we will wait until it falls back to 1.3130 before considering buying

Economists from Rabobank suggest that the Bank of England may only cut interest rates once every quarter in the future. In contrast, the bank now predicts that the Federal Reserve will cut interest rates by 25 basis points at four consecutive meetings between September 2024 and January 2025.

Jane Foley, Senior Foreign Exchange Strategist at Rabobank, said, "We will buy the pound on dips and look forward to a good performance of the pound against the US dollar and the euro in the spring of next year

Market analyst Gary Howes said that the United States will release the next round of macroeconomic data, and the possibility of further correction of the pound against the dollar will increase. Pay special attention to the US August employment report to be released next Friday. A stronger than expected outcome will lead to a significant sell-off of US dollar bears, deepening the pullback of GBP/USD.

Daily chart of GBP/USD