British Pound Short-term Outlook: GBP/USD Rally Unravels Ahead of Fed
The Sterling recovery is unwinding with a third daily sell-off now threatening the yearly uptrend. Battle lines drawn on the short-term technical charts into the Fed.
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British Pound Technical Outlook: GBP/USD Short-Term Trade Levels
- British Pound poised to mark third consecutive daily decline- bears attempting to break yearly uptrend
- GBP/USD plunges to key support at monthly lows- risk for infection heading into Fed, PCE, NFP
- Resistance 1.3453, 1.3563/77, 1.3627 (key)- Support 1.3371/88, 1.3143/76 (key), 1.3000/45
The British Pound is on the defensive early in the week with GBP/USD plunging into support at the monthly lows. The bears are attempting to solidify a break of the yearly uptrend, and the focus is on today’s close for guidance with major event risk on tap into the monthly cross. 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 my last GBP/USD Short-term Outlook, we noted that a, “reversal from trend resistance threatens a larger correction within the broader GBP/USD uptrend.” Sterling has plunged more than 3% off the monthly / yearly high with the bears now attempting to confirm a break of the January uptrend. The immediate focus is on the June low / 61.8% retracement of the May advanced at 1.3371/88- a break / close below this threshold would threaten a larger Sterling breakdown. Fed, PCE, NFPs on tap into the monthly open- watch the Friday close.
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 dropping into support today in New York trade. The median-line of a proposed descending pitchfork off the highs (blue) converges on the weekly opening-range high at 1.3453- look for initial resistance there. Subsequent resistance objectives eyed at 1.3563/77 and the 61.8% retracement of the monthly decline at 1.3627 (bearish invalidation).
A break / close below this key pivot zone threatens another bout accelerated declines toward the lower parallel with the next major technical consideration eyed at 1.3143/76- a region defined by the 38.2% retracement of the yearly range, the 100% extension of the July decline, and the May low-day close (LDC). Look for a larger reaction there IF reached.
Bottom line: The British Pound is threatening the yearly uptrend with the decline now testing technical support at the June lows. From at trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be limited to today’s high IF price is heading lower on this stretch with a close below 1.3370 needed to keep the immediate decline viable.
Keep in mind there is major event risk on tap this week with the Fed interest rate decision, Core Personal Consumption Expenditures, and Non-Farm Payrolls slated into the monthly cross. Stay nimble into the releases and watch the weekly close for guidance. 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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