GBPUSD Takes A Pounding

The British Pound earlier today hit an all-time low against the dollar, continuing a sell-off that began last week after the government announced a tax-cut plan that would be funded in large part by a massive new government bond issuance. U.K. bonds tumbled as well.

After the Friday selloff, we looked at what the Markov process had to say about what might happen this week - it showed a big state crossing that foreshadowed the selloff earlier today.

One popular indicator that chartists like to follow is the RSI and on Friday, that sat at a remarkably low 17.572. Typically, an RSI under 30 indicates an oversold situation. For chartists who like to follow RSI, we think using that in conjunction with Markov can make a lot of sense. For example, there was another significant Markov cross on April 21 and on that day, the RSI was at 41. And then it began to sink. By April 27, the RSI fell to 17.572 and the GBPUSD was strengthening briefly - until May 4 when it began a sustained decline.