British Pound Short-term Outlook: GBP/USD Facing Support– Risk Mounts
Sterling is sliding towards pivotal support, and a breakdown here could ignite the next wave of selling. Battle lines drawn on the GBP/USD short-term technical.
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British Pound Technical Outlook: GBP/USD Short-Term Trade Levels
- British Pound approaches monthly support as the October opening range takes shape
- GBP/USD remains under pressure with downside momentum building- limited event risk this week
- Resistance 1.3478/90, 1.3572/87, 1.3626/40- Support 1.3365/71, 1.3267/80 (key), 1.3207
The British Pound is approaching key support at monthly lows as the October opening range begins to take shape. The recent pullback in GBP/USD keeps focus on a pivotal zone just above the median-line, where a close below would risk fueling the next leg lower. Battle lines drawn 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 last month’s British Pound Short-term Outlook, we noted that GBP/USD was trading below resistance at the August highs and that “losses would need to be limited to the June lows IF price is heading higher on this stretch with a close above the monthly swing highs needed to mark uptrend resumption.” Sterling broke higher three-days later with the rally exhausting on September 17th (Fed-day) at 1.3727 before reversing sharply lower. Price is now trading within the confines of a proposed descending pitchfork extending off the mid-June highs with the recent recovery failing this week at the 75% parallel.
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 an embedded descending channel off the September high. Price is now approaching initial support at the 61.8% retracement of the August rally / June swing low at 1.3365/70- looking for a possible reaction off this mark in the days ahead. A break / close below would threaten downtrend resumption with subsequent support objectives seen at the 78.6% retracement / August low-day close (LDC) at 1.3267/80 and the July low-close at 1.3207. Key support rests at 1.3125/43- a region defined by the 100% extension of the September decline and the 38.2% retracement of the yearly range (area of interest for possible exhaustion / price inflection IF reached).
Initial resistance is eyed with the weekly open / opening-range high at 1.3479/90- a topside breach / close above this threshold would be needed to shift the focus back towards the upper parallel with subsequent resistance objectives seen at the 61.8% retracement of the September decline / July swing high at 1.3572/87 and bearish invalidation at the September high-day close (HDC) / 78.6% retracement at 1.3625/40.
Bottom line: The British Pound is carving the October opening-range just below downtrend resistance – look for a breakout in the days ahead for guidance here. From a trading standpoint, rallies should be limited to 1.3587 IF price is heading lower on this stretch with a close below the median-line needed to suggest a more significant high is in place / fuel the next leg lower price.
Keep in mind that US / UK data is light this week and traders will be closely monitoring negotiations regarding the ongoing government shutdown. 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
Follow Michael on X @MBForex
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