British Pound Price Action Setups: GBP/USD, GBP/JPY

The British pound has shown resilience against the US dollar but remains vulnerable to renewed yen strength. GBP/USD is consolidating above key support with scope for a rebound, while GBP/JPY faces mounting resistance following an overextended rally. Together, these setups highlight how sterling’s outlook differs across major counterparts.

Chart prepared by Matt Simpson - data source: LSEG

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GBP/USD and GBP/JPY Technical Setups Highlight Diverging Sterling Trends

GBP/USD Technical Analysis: British Pound vs US Dollar

Last Thursday, I outlined a bias for GBP/USD to bounce over the near term. While cable went on to reach a nine-week low later that day, several nearby support levels place British pound bulls in a better position for a rebound — at least in the short term.

A heavily oversold daily RSI(2) accompanied Thursday’s low, before the subsequent up day found support at the 200-day EMA (1.3267) and the monthly S1 pivot point (1.3269). While a small bearish inside day that followed showed a lack of appetite for GBP/USD to push higher, I suspect any pullback in the pound will remain above Friday’s low for now.

1.3400 seems a viable near-term target for GBP/USD bulls, just beneath the current VPOC (volume point of control) for October. A break above 1.3440 brings 1.3500 into focus, which sits between the monthly pivot point (1.3497) and September’s VPOC (1.3516).

Chart analysis by Matt Simpson - data source: TradingView GBP/USD

GBP/USD Technical Analysis: 4-Hour Chart

The intraday timeframe of GBP/USD captures the strength of Monday’s rebound from support. And with prices now consolidating, a potential bull flag counter to the prior trend could be in play. It is a shame that the weekly pivot point (1.3370) hovers overhead, but I am anticipating a break above it given the strength of the rebound from several solid levels of support.

GBP/USD bulls could seek dips within Monday’s range in anticipation of a break above the monthly pivot. A break above which brings the October VPOC into focus. Also note that the weekly R1 pivot (1.3480) sits just below the monthly pivot point (1.3497).

GBP/JPY Technical Analysis: British Pound vs Japanese Yen

The British pound finds itself in a very different position against the Japanese yen compared with the US dollar, meaning GBP/JPY is out of phase with USD/JPY. News that a less-hawkish prime minister is set to take the helm in Japan saw a broad sell-off of the yen last week, though renewed risk aversion has since supported the yen and weighed on pairs such as GBP/JPY and USD/JPY.

The daily chart suggests GBP/JPY has likely completed the first wave lower — either as part of a correction or the start of a new trend. This implies that the current two-day rebound is corrective in nature, and momentum could soon turn lower in line with the recent sell-off. I doubt GBP/JPY will swiftly break back below the 200 handle without a fresh catalyst, but that still leaves some wriggle room for bears to press the downside over the near term.

Chart analysis by Matt Simpson - data source: TradingView GBP/JPY

GBP/JPY Technical Analysis: 4-Hour Chart

The intraday chart shows that momentum has turned higher, though the current rally has stalled around the monthly R3 pivot point. The fact that GBP/JPY has already traded above the R4 resistance level — and not even halfway through the month — highlights how overextended the prior rally was.

I’m now looking for signs of a swing high, with the 204 handle, monthly R4, and weekly R1 pivots clustered around 204.50 forming potential resistance zones where momentum could begin to revert lower.

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-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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