British Pound Forecast: GBP/USD Holds the Line- Coils for Breakout

British Pound Technical Forecast: GBP/USD Weekly Trade Levels

British Pound is defending confluent uptrend support at the median-line
GBP/USD breakout of October opening-range to dictate medium-term direction
China trade dispute / U.S. government shutdown continues to weigh on risk sentiment- key inflation data on tap next week
Resistance 1.3434/69, 1.3544 (key), 1.3648- Support 1.3267/80 (key), 1.3140/44, 1.3077/80

The British Pound is holding the line at confluent uptrend support, with GBP/USD consolidating inside the October opening range as traders await a decisive breakout for guidance. Headline risk is elevated heading into next week and the battle lines are drawn on the GBP/USD weekly technical chart.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling setup and more. Join live on Monday’s at 8:30am EST.

British Pound Price Chart – GBP/USD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView

Technical Outlook: In last month’s British Pound Weekly Forecast we noted that the near-term risk was weighted to the downside and that, “from a trading standpoint, look to reduce short-exposure heading into slope support- rallies should be limited to 1.3469 IF price is heading lower on this stretch with a close 1.3267 needed to fuel the next major leg of the decline.” GBP/USD plunged into the median-line last week with price registering an intraweek low at 1.3249 on Tuesday. A rebound off confluent support takes Sterling back into a key pivot zone this week and the focus is on a reaction off this mark in the days ahead.

Resistance is eyed at the 2024 swing high / September high-week close (HWC) at 1.3434/69- a topside breach / weekly close above this threshold would threaten a larger recovery towards the 61.8% retracement at 1.3544 and the yearly HWC at 1.3648 (both levels of interest for possible topside exhaustion / price exhaustion IF reached. Ultimately a breach above the 75% parallel / 2022 high at 1.3749 is needed to mark resumption of the broader uptrend with next major technical consideration eyed at the 61.8% extension of the 2022 advance at the 1.40-handle.

Key support rests with the 78.6% retracement of the August rally / July low-week close (LWC) at 1.3267/80. Note that the median-line converges on this threshold over the next few weeks and losses surpassing this slope would suggest a more significant high is in place / a larger reversal is underway. Subsequent support objectives rest with the May & August lows / 2023 high / 38.2% retracement of the yearly range at 1.3140/44 and 1.3077/80- a region defined by the 52-week moving average and the 100% extension of the June decline. Look for a larger reaction there IF reached.

Bottom line: Sterling has responded to confluent uptrend support at the median-line and the immediate focus is on a breakout of the October opening-range for guidance. From a trading standpoint, rallies should be limited to 1.3544 IF price is heading for a break lower on this stretch with a close below 1.3267 needed to fuel the next leg of the decline.

Keep in mind we get the release of key UK / US inflation data next week with traders closely monitoring the ongoing China trade dispute amid the ongoing government shutdown. The headline risk over the next few weeks is significant- stay nimble here and watch the weekly closes for guidance. Review my latest British Pound Short-term Outlook for a closer look at the near-term GBP/USD technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist

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