British Pound Short-term Outlook: GBP/USD Threatens July Downtrend
Sterling surged more than 3.4% off the monthly low with the bulls stalling today at the July downtrend. 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 marks V-shaped recovery off multi-month lows into August open
- GBP/USD rally stalling today at July downtrend- bulls vulnerable below resistance
- Resistance 1.3567/87, 1.3650 (key), 1.3749- Support 1.3488, 1.3452, 1.3370 (key)
The British Pound surged more than 3.4% off multi-month lows, with GBP/USD now testing confluent resistance at the July downtrend. This marks a key technical pivot for the bulls and while August recovery remains intact, the long bias is vulnerable while below this slope. 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, “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.” Sterling broke lower later that day with the July decline extending nearly 4.7% off the yearly high.
An outside-day reversal off the lows into the August open has fueled a V-shaped recovery off the lows with GBP/USD surging more than 3.4% off the pre-NFP lows. The rally is testing resistance today at the 1.618% extension of the monthly advance / late-July swing high at 1.3567/87- note that the upper parallel of the July downtrend rests just higher and the monthly advance is vulnerable while below this slope. Risk for possible topside exhaustion / price inflection 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 an embedded ascending channel formation with the upper parallel further highlighting near-term resistance today. Initial support rests with the 23.6% retracement of the advance near 1.3488 and is backed closely by the objective weekly open at 1.3452. Ultimately a break / close below the June low at 1.3370 would be needed to mark resumption of the July downtrend with subsequent support objectives eyed at the August low-day close (LDC) at 1.3280 and 1.3143/65- a region defined by 38.2% retracement of the yearly range, the August low, and the 100% extension of the July decline (look for a larger reaction there IF reached).
A topside breach above this hurdle exposes the yearly high-week close / 78.6% retracement of the July decline at 1.3648/50. We’ll reserve this threshold as our bearish invalidation levels with a daily close above needed to suggest a more significant low is in place / a lager reversal is underway. Subsequent resistance objectives eyed at the 2022 high at 1.3749 and the 100% extension of the yearly advance at 1.3816.
Bottom line: The British Pound is poised to mark only the second down-day this month as the bulls stall into technical resistance. From a trading standpoint, the August rally remains vulnerable while below this slope- losses would need to be limited to 1.3370 IF Sterling is heading higher on this stretch with a close above 1.3650 ultimately needed to mark uptrend resumption.
Keep in mind we get the release of U.S retail sales and consumer sentiment tomorrow with key UK inflation data and the Jackson Hold World Economic Symposium on tap next week. Stay nimble into the releases and watch the weekly closes here 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
Active Short-term Technical Charts
- Canadian Dollar Short-term Outlook: USD/CAD Coils Within July Uptrend
- Australian Dollar Short-term Outlook: AUD/USD Recovery at Resistance
- Gold Short-term Outlook: XAU/USD Rebound Testing Key Resistance
- Swiss Franc Short-term Outlook: USD/CHF Pullback Eyes Uptrend Support
- US Dollar Short-term Outlook: USD Bears Test July Breakout
- Euro Short-term Outlook: EUR/USD Plunges to Support Ahead of Fed
--- Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
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