British Pound Short-term Outlook: GBP/USD Rally at Risk as Sterling Tests Support
Sterling is testing support as momentum slows, putting the recent rally at risk. Traders are watching closely for direction. Battle lines drawn on the GBP/USD charts.
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British Pound Technical Outlook: GBP/USD Short-Term Trade Levels
- GBP/USD is pulling back from last month’s high, with Sterling now testing initial support
- Risk for near-term price inflection into this zone, outlook still constructive while within November uptrend
- Resistance 1.3269/84 (key), ~1.338, 1.3371- Support 1.3185, 1.3129/40 (key), 1.3097
The British Pound is on the back foot after last week’s advance, with GBP/USD now testing initial support at the 38.2% retracement of the late-November rally. While the broader structure remains technically constructive, the reaction here will be essential in determining whether the November advance can hold or if a deeper pullback takes shape into the monthly open. Battle lines drawn on the Serling 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, “testing confluent support near the lower bounds of a multi-month downtrend- risk for some kickback here.” Sterling rallied more than 2.1% off those lows with price breaking out of the September downtrend last week. The rally exhausting into near-term uptrend resistance yesterday and the immediate focus is on this pullback with the monthly opening-range taking shape just below.
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 extending off the November lows. Price is now testing initial support at the 38.2% retracement of the late-November rally at 1.3185. Note that the 25% parallel converges on this threshold today and the focus is on possible price inflection off this zone in the days ahead.
Key support and near-term bullish invalidation rests at the lower parallel around 1.3129/40- a region defined by the 61.8% retracement and the May & August lows. A break / close below this threshold would suggest a more significant high is in place / a larger reversal is underway with subsequent support seen at the October low at 1.3097 and the 2024 July high & September low-day close (LDC) and the November low at 1.3000/45. Losses below this threshold would threaten resumption of the September downtrend.
Resistance is eyed with the November high and the 38.2% retracement of the September decline at 1.3269/84. A breach / close above this pivot zone is needed to mark uptrend resumption with subsequent resistance objectives eyed at the 200-day moving average at ~1.3318, the June low / 1.618% extension at 1.3371 and the 61.8% retracement 1.3453. Look for a larger reaction there IF reached.
Bottom line: The British Pound exhausted into uptrend resistance yesterday with the weekly / monthly opening-range taking shape just below. From a trading standpoint, losses would need to be limited to 1.3129 for the November advance to remain viable with a breach above 1.3284 needed to fuel the next leg of the rally.
Keep in mind we get the release of the November ADP employment report tomorrow with the September Core Personal Consumption Expenditures (PCE) on tap Friday. 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
Active Short-term Technical Charts
- Gold Price Outlook: XAU/USD Bulls Charge Pivotal Resistance- Inflection Ahead
- Swiss Franc Short-term Outlook: USD/CHF 8-Day Rally Fuels V-shaped Recovery into Resistance
- Canadian Dollar Short-term Outlook: USD/CAD Breaks Out- Bulls Eye Pivotal Resistance
- Australian Dollar Outlook: AUD/USD Threatens Breakout as Bears Test Support Ahead of NFP
- Japanese Yen Short-term Outlook: USD/JPY Testing Pivotal Resistance at Ten-Month High
- US Dollar Short-term Outlook: USD Rejected at Resistance- Key Test Ahead
- Euro Short-term Outlook: EUR/USD Snaps 1.15- Recovery Risk Rises
--- Written by Michael Boutros, Senior Technical Strategist
Follow Michael on X @MBForex
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