British Pound Forecast: GBP/USD Breakout Accelerates, Bears Retreat

British Pound Technical Forecast: GBP/USD Weekly Trade Levels

British Pound breaks out of September downtrend- threatens larger recovery
GBP/USD key resistance in view- UK employment / inflation data tap
Resistance 1.2609, 1.2731/73 (key), 1.2924- Support 1.2493, 1.2367/97 (key), 1.2084-1.2114

The British Pound has broken out of a multi-month downtrend with the January rebound extending nearly 4.4% off the yearly low. The advance is testing initial resistance hurdles into the weekly open with the yearly moving average now within striking distance. Battle lines drawn on the GBP/USD weekly technical chart.

British Pound Price Chart – GBP/USD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView

Technical Outlook: In my last British Pound Weekly Forecast we noted that GBP/USD was, “trading into a major pivot zone- looking for possible price inflection off the 1.2367-1.2397 range. From a trading standpoint, losses would need to be limited to this week’s low IF price is heading for a breakout on this stretch with a close above channel resistance needed to clear the way for a larger advance.” Sterling held the 1.2367/97 support zone with a breakout this week extending more than 3.1% off the monthly low. The rally has now cleared the September channel / downtrend and threatens a lager recovery in the pound.

Initial resistance is being tested here at the 38.2% retracement of the September decline at 1.2609 with more significant resistance zone eyed just higher at 1.2730/73- a region defined by the 2024 objective yearly open, the 52-week moving average, and the February 2019 swing low. Looking for a larger reaction there IF reached with a breach / close above needed to suggest a more significant low was registered last month / a lager reversal is underway. Subsequent resistance objectives eyed at the 61.8% retracement at 1.2924.

Look for initial weekly support rests with the 2024 low-week close (LWC) at 1.2494. Near-term bullish invalidation now set to 1.2367/97- a region defined by the April low close, the 2023 January high-week close (HWC), and the May LWC. Losses below this threshold would invalidate the recent breakout and threaten downtrend resumption. Critical support steady at the 2023 open / LWC at 1.2084-1.2114.

Bottom line: Sterling has broken out of a multi-month downtrend this week with the advance threatening a larger recovery in the weeks ahead. From a trading standpoint, losses should be limited to 1.2367 IF price is heading higher on this stretch – look to reduce long-exposure / raise protective stops on rally towards the 52-week moving average.

Keep in mind we get the release of key employment & inflation data from the UK next week. Stay nimble into the releases and watch the weekly closes here for guidance. Review my latest British Pound Short-term Outlook for a closer look at the near-term GBP/USD technical trade levels.

GBP/USD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.