British Pound Technical Forecast: GBP/USD Bulls Emerge at Support

British Pound Technical Forecast: GBP/USD Weekly Trade Levels

British Pound poised to mark fourth-monthly decline- bulls responding to key technical support
GBP/USD risk for near-term price inflection- Retail sales, U.S. Presidential Inauguration on tap
Resistance 1.2367/97, 1.2494 (key), 1.26- Support 1.2084-1.2114 (key), 1.1841/89, 1.1632

The British Pound has plunged more than 3.3% since the start of month / year with GBP/USD responding to key support this week. The four-month decline may be vulnerable while above his key inflection zone and the immediate focus on this recovery in the days ahead. 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 last month’s British Pound Weekly Forecast we noted that the GBP/USD was trading into resistance at a major pivot zone with, “the immediate focus is on a breakout of the monthly range with the broader outlook still weighted to the downside while below 1.2850.” Support broke two-weeks later with Sterling plunging more than 5.2% off the December highs.

The decline responded to key support on Monday at the 2023 yearly open / 2023 low-week close (LWC) at 1.2084-1.2114. Looking for a reaction off this mark with the immediate short-bias vulnerable while above.

Initial weekly resistance is eyed at 1.2367/97- a region defined by the April low-close, the 2023 January high-week close (HWC) and the May low-week close (LWC). Note that basic channel resistance converges on this threshold over the next few weeks and further highlight the technical significance of this threshold. Ultimately, a breach / close above the 2024 LWC at 1.2494 would be needed to suggest a more significant low was registered this week / a larger trend reversal is underway (bearish invalidation).

A break / weekly close below this key pivot zone would threaten another bout of accelerated losses with subsequent support objectives seen at the January 2024 swing low / 50% retracement of the 2022 advance at 1.1841/89 and the 2020 LWC at 1.1632- both areas of interest for possible exhaustion / price inflection IF reached.

Bottom line: A four-month sell-off takes GBP/USD into pivotal support – risk for possible inflection off this zone. From a trading standpoint, a good region to reduce short-positioning / lower protective stops- rallies should be limited to 1.2397 IF price is heading lower on this stretch with a close below 1.2084 needed to mark downtrend resumption.

Keep in mind we get the release of US & UK retail sales data the close of the week with key UK employment data and the inauguration of President Trump on tap early next week. Stay nimble into the release 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.

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

Follow Michael on X @MBForex

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