British Pound Technical Analysis: GBP/USD Reverses into Rally

GBP/USD, British Pound Talking Points:

I’ve been tracking GBP/USD for USD-weakness scenarios lately and I went over a setup in last week’s webinar that remains relevant today.
At issue last week was a run of USD-strength, and as I had highlighted this brought into play a key zone of support in GBP/USD. That zone has held the lows and pushed into a bullish reversal that’s now pushed above the 1.3500 psychological level.
I look into GBP/USD during each weekly webinar and you’re welcome to join the next. Click here to register.

USD bulls had an open door to make a move last week, especially after the CPI report on Tuesday. That move extended through Wednesday morning until President Trump again threatened to fire Jerome Powell, which helped to dent the rally. USD buyers weren’t necessarily done for at that point as they pressed back into the highs a day later; but that’s where U.S. Dollar strength has so far ceased to continue, and to start this week, the Dollar continues to pullback and that’s helping to perk up multiple major pairs, GBP/USD included.

GBP/USD remains of interest as the pair came in to test a significant support zone last week. I looked at the setup before it came into play during the Tuesday webinar, highlighting the 1.3395-1.3414 support zone. I even showed how I wanted buyers to respond which ended up showing, as they quickly came into bid a test below the zone, which then led to slightly higher-lows. And now to start the week we have fresh higher-highs and that’s opening the door to bullish continuation scenarios in the pair.

GBP/USD Four-Hour Price Chart

Chart prepared by James Stanley; data derived from Tradingview

GBP/USD Bigger Picture

The question now is whether USD bulls can continue to push and from a shorter-term perspective, there’s some resistance to contend with sitting overhead; and there’s also the matter of the 1.3500 level to contend with as the pair is now trading above that price. This can make for a difficult backdrop to chase as there’s still not much for convincing evidence that the pair has gained acceptance above that price, so pullbacks can remain an attractive way of working with the move. For that, there’s a prior swing of resistance to support at 1.3466 and another at 1.3441, both of which would constitute a higher-low above the early-week low in the pair.

GBP/USD Two-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

GBP/USD Daily Chart

For the past couple of months GBP/USD has been mean-reverting and the support that was in-play last week is the same that was in-play in late-June. This also highlights some additional levels and zones of interest, such as the 1.3500 level looked at above, or the 1.3593-1.3617 zone that sits overhead. That would be the next resistance for buyers to contend with if they can continue to stretch the short-term bullish move.

GBP/USD Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist

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