British Pound Short-Term Outlook: GBP/USD Slams to Support

British Pound Technical Outlook: GBP/USD Short-Term Trade Levels

British Pound breakdown underway as Sterling clears seven-week range
GBP/USD plunges more than 2.4% off December high- now testing initial support hurdle
Resistance 1.2623/33, 1.2688, 1.2773-1.2823– Support 1.2525/43 (key), 1.2400/23, 1.2337/39

A British Pound breakout is underway with GBP/USD clearing a seven-week price range. A decline of more than 2.4% takes price into initial support hurdles– risk for possible price inflection here with the broader threat weighted to the downside while below the objective monthly open. These are the updated targets and invalidation levels that matter on the GBP/USD short-term technical charts.

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British Pound Price Chart – GBP/USD Daily

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

Technical Outlook: In last month’s British Pound Short-term Outlook we noted that GBP/USD had, “carved well-defined weekly / monthly opening-ranges – immediate focus is on a breakout with the long-bias vulnerable while below the December high. From a trading standpoint, the risk remains for a deeper correction after the 6.57% rally off the October lows…” Sterling held this key range into January close with price finally breaking sharply lower yesterday. A decline of more than 2.7% takes GBP/USD into confluent support here at 1.2525/43- a region defined by the 38.2% retracement of the October advance and the 100% extension of the December decline. We’re looking for possible price inflection off this mark.

British Pound Price Chart – GBP/USD 240min

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

Notes: A closer look at Sterling price action shows GBP/USD rebounding off confluent support today. Initial resistance is eye at the December / weekly open at 1.2623/33 and is backed by the objective February open at 1.2688- we’ll reserve this level as our near-term bearish invalidation level with a breach above the December channel (currently ~1.2730s) ultimately needed to suggest a more significant low is in place.

A break / daily close below this threshold is needed to fuel the next leg lower in price with such a scenario exposing subsequent support objectives at the 1.618% ext / December 2022 high-day close (HDC) at 1.2400/23 and the 61.8% Fibonacci retracement at 1.2339- both regions of interest for possible downside exhaustion / price inflection IF reached.

Bottom line: Sterling has broken a seven-week range with the decline testing a key technical support hurdle this week. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops – rallies should be limited to the monthly open IF price is heading lower here with a weekly close sub-1.2525 needed to mark downtrend resumption. Review my latest British Pound Weekly Forecast for a closer look at the longer-term GBP/USD trade levels.

Key GBP/USD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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Written by Michael Boutros, Sr Technical Strategist with FOREX.com

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