British Pound Forecast: GBP/USD Heads for Biggest Weekly Drop Since May
Sterling selling has intensified after the September range broke lower, with GBP/USD now confronting a major Fibonacci support zone.
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British Pound Technical Forecast: GBP/USD Weekly Trade Levels
- GBP/USD has fallen nearly 2.5% from the August high after breaking below the September opening range.
- Sterling is testing major Fibonacci support, where the next reaction could determine whether the decline extends into a deeper correction.
- A recovery above the yearly open would be needed to strengthen the case that a more significant low is forming.
- With this week’s Fed and BoE decisions behind us, UK and U.S. PMI data highlight the next round of event risk.
- Resistance ~1.3410, 1.3474 (key), 1.3648/85- Support 1.3345, 1.3255, 1.3194 (key)
Sterling has come under heavy pressure following last month’s rejection from major resistance, with the decline gathering momentum through September. The latest move has materially weakened the near-term technical picture and brought GBP/USD to an important inflection point where the bears will need further confirmation to sustain the decline. With the major central-bank decisions now behind us, attention shifts toward incoming growth data for clues on whether the current weakness has further to run. Battle lines 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 GBP/USD was approaching resistance and that, “From a trading standpoint, look to reduce long-exposure / raise protective stops on a stretch towards 1.3591- losses should be limited to the 1.3474 IF price is heading for a breakout on this stretch with a topside breach needed to fuel a rally towards the yearly high-close.” Sterling broke higher later that week with the rally extending into pivotal resistance at the 2025 & 2026 high week closes (HWC) at 1.3648/85. A sharp reversal the following week has now extended nearly 2.5% off the August high with the break below the September opening range yesterday suggesting the potential for late-month low in price. Note that weekly momentum has now fallen back below 50 for the first time since July.
GBP/USD is now poised to mark the largest weekly decline since May when price turned from the very same level. The bears are testing weekly support today at the 61.8% retracement of the June rally at 1.3345. The immediate focus is on a reaction off this zone with a break / weekly close below needed to fuel the next leg of the decline towards the 78.6% retracement at 1.3255. Critical support remains unchanged at 1.3194- a level defined by the 2026 low-week close (LWC), the March low close, and the 38.2% retracement of the 2025 rally. Note that basic trendline support extending off the November low converges on this level over the next few weeks and losses below this slope would be needed to validate a breakout of the yearly opening range.
Look for initial resistance at the 52-week moving average, (currently ~1.3410) with key resistance eyed back at the yearly open at 1.3474. This has been a major pivot zone for Sterling since the start of the year and a breach / weekly close above this threshold would be needed to suggest a more significant low is in place, and a larger recovery is underway. Ultimately, strength surpassing 1.3648/85 is needed to fuel a major breakout towards the 2025 & 2026 stretch highs at 1.3789 and 1.3870.
Bottom line: GBP/USD is testing major Fibonacci support here on the heels of the Fed rate decision with an objective breakout of the monthly range tilting the near-term outlook to the downside for now. From a trading standpoint, rallies should be limited to 1.3474 IF price is heading lower on this stretch with a close below 1.3345 needed to fuel the next leg lower in Sterling.
After this week’s packed slate of inflation data and back-to-back Fed and Bank of England decisions, the focus shifts to fresh growth indicators next week. Flash Manufacturing and Services PMI figures are due from both the UK and U.S. on Wednesday, offering an important read on economic momentum on either side of GBP/USD. Traders will also hear from several Fed officials, including Goolsbee and Hammack, as markets digest this week’s policy decision and updated projections. With the major central-bank catalysts now behind us, the relative strength of incoming growth data could play a larger role in shaping near-term Sterling and U.S. dollar direction. Stay nimble here and watch the weekly close for guidance. I’ll publish an updated British Pound Short-term Outlook once we get further clarity on the near-term GBP/USD technical trade levels.
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--- Written by Michael Boutros, Senior Technical Strategist
Follow Michael on X @MBForex
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