British Pound Short-term Outlook: GBP/USD Bulls Eye Resistance
British Pound nearly erased the monthly declines with GBP/USD carving a weekly opening-range ahead of the Fed. Battle lines drawn on the short-term technical charts.
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British Pound Technical Outlook: GBP/USD Short-Term Trade Levels
- British Pound tries to erase monthly losses- Sterling rallies 3.5% into yearly open resistance
- GBP/USD weekly opening-range in focus heading into FOMC, U.S. 4Q GDP & key inflation data
- Resistance 1.2487-1.2514, 1.2575-1.2613 (key), 1.2731/73- Support 1.2415, 1.2349, 1.23(key)
The British Pound staged the largest single-week rally since November 2022 last week with GBP/USD rebounding sharply back into yearly open resistance. The weekly opening-range has taken shape just below resistance and the battle lines are drawn heading into the FOMC rate decision and key inflation data this week. These are the levels that matter on the GBP/USD short-term technical charts.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling technical setup and more. Join live on Monday’s at 8:30am EST.
British Pound Price Chart – GBP/USD Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView
Technical Outlook: In my last British Pound Short-term Outlook, we noted to look for possible inflection as GBP/USD was testing slope support with, “the next major technical considerations at the 2023 objective yearly open (1.2084) and the October 2023 swing low at 1.2337- both levels of interest for possible downside exhaustion / price inflection IF reached.” Sterling broke lower the following day with price registering an intraday low at 1.2099 before rebounding sharply.
The subsequent rally extended 3.5% off the lows with the bulls nearly erasing the entire monthly decline. The immediate focus is on this reaction into yearly open-resistance at 1.2514 with the objective weekly opening-range taking shape just below- looking for a breakout in the days ahead.
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 trading within the confines of an ascending pitchfork with the lower parallel now highlighting near-term support at the 23.6% retracement of the September decline at 1.2415. A break below this threshold would threaten a deeper pullback towards the 2024 low-day close (LDC) at 1.2349 and the 2024 swing low at the 1.23-handle- losses below this level would suggest a more significant high was registered / threaten downtrend resumption. Subsequent support eyed at the yearly LDC at 1.2202 with 1.20347/84 still critical.
A topside breach / close above 1.2514 exposes key resistance at 1.2575-1.2613- a region defined by the January high, the 38.2% retracement, and the June / July swing lows. Look for a larger reaction there IF reached with a breakout needed to suggest a more significant trend reversal is underway towards key resistance at the 2024 yearly open / February 2019 low at 1.2731/73.
Bottom line: The British Pound rallied back in to yearly open-resistance with the weekly opening-range taking shape just below- the immediate focus in on a breakout here with the recent recovery vulnerable into the yearly open. From a trading standpoint, losses would need to be limited to 1.23 IF price is heading for a larger recovery here with a breach above 1.2613 ultimately needed to suggest a more significant reversal is underway.
Keep in mind the Federal Reserve interest rate decision is slated for tomorrow with Q4 GDP and key inflation data (US core PCE) on tap into the close of the week. Stay nimble into the releases and watch the weekly close for guidance here. Review my latest British Pound Weekly Forecast for a closer look at the longer-term GBP/USD technical trade levels.
Key GBP/USD Economic Data Releases
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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com
Follow Michael on X @MBForex
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