The Great British Pound & the Euro attempt to retrace steep losses against the dollar.

Sterling rallies following a sharp decline

Early this morning heading into the London open session GBP/USD was trading at $1.5313, up 0.19% as it began recovering from a sharp fall in overnight markets. This saw a low of $1.5173, capping a bearish run which – since December 31 – has seen a -2.86% decline.

Today’s release of the UK’s construction PMI data is expected to show a deceleration from November’s 59.4 to 59.0 in December, and if achieved it may be sufficient in stemming any further declines on Monday.

The sharp decline from $1.5620 to a low of $1.5173 unsurprisingly resulted in a deeply oversold market, with an RSI reading of 6.5 coinciding with the low. This has since pushed higher to 34.2 – a level which still may allow for another retest of the recent lows.

Intermediate support/resistance levels: downside resistance appears to present itself at the $1.5253 level, which if held could see a retest of topside support at $1.5375.