Pound-to-Dollar Rate Rebounds, but Break Below January Lows is a Very Bearish Red Flag

Despite the gains over the past 24 hours studies of the charts suggest the pair will probably continue declining in its established downtrend over the next five days.

The Pound was on course for its third consecutive day of losses early Wednesday and is likely to remain under pressure in the days and weeks ahead, according to analysts at ING Group, who say the British currency is a sell. 

The Dollar roared into life Tuesday, building on a positive start to the new week and forcing a Brexit-stricken Pound Sterling to a two-year low, after strong retail sales data prompted some in the market to contemplate whether a second anticipated Federal Reserve (Fed) interest rate cut is really a done deal for September. 

The GBP/USD exchange rate is trading at around 1.2573 at the start of the new week after rising 0.4% from the previous week. Studies of the charts suggest the pair could be reversing and might go higher over the next five days.

The Dollar drew support Thursday from official figures that showed inflation rising faster than was expected during June, potentially leading some investors to conclude that elevated consumer price pressures could prevent the Federal Reserve (Fed) from cutting its interest rate as much as markets expect. 

The Pound has begun to recover lost ground from the Dollar since eary in the Wednesday session and could go on rising over the coming weeks according to technical analysts at Commerzbank, although toward the end of July the Brexit saga will return to the headlines and fresh analysis from TD Securities suggests that could mark the beginning of a punishing bout of volatility for the British currency. 

The Dollar slumped Wednesday after Federal Reserve (Fed) Chairman Jerome Powell appeared to validate market bets that a series of U.S. interest rate cuts are on the way, during testimony to congress, which could have just set the greenback up for a more protracted decline.

The Dollar was on its front foot Tuesday as investors pared back earlier bets against it ahead of Federal Reserve (Fed) Chairman Jerome Powell's eagerly-anticipated appearance before Congress, but analysts at Barclays say the U.S. currency will continue to dominate rivals for a while yet.