British Pound Technical Forecast: GBP/USD, GBP/JPY, EUR/GBP

British Pound Talking Points:

• It was a rough week for the British Pound, as GBP sold-off against all of the Euro, U.S. Dollar and Japanese Yen.
• Next Wednesday is key as we’ll see the next release of UK CPI ahead of the release of US CPI data.

It was a brutal week for the British Pound as the currency lost against all of the U.S. Dollar, the Euro and the Japanese Yen. In the major pair of GBP/USD, a fresh yearly low came into play as the final four days of the week produced a move that dropped by more than 380 pips, at one point. Perhaps more disconcerting for Sterling bulls is where the move took place, as a prior support at 1.2300 was taken-out before a bounce developed from 1.2250. But even that couldn’t last as the Friday NFP report helped to produce another downside thrust in the move until price breached the 1.2200 level.

At this point, there’s no sign yet of bears letting up and the next major level of contention below current price is the 1.2000 psychological level that hasn’t traded since early-2023.

GBP/USD Weekly Price Chart

GBP/USD

At this point the challenge on Cable is how established the move has become. As of this writing RSI is pushing back into oversold territory on the daily chart and this would be the first such occurrence of that since November. This, of course, does not preclude bearish continuation, but it does urge caution from chasing, and given prior short-term support structure, there are a few areas of note that bears can look to for lower-high resistance.

The psychological level of 1.2250 is of interest, after which the Fibonacci level I had looked at earlier in the week at 1.2297 comes into the picture. And above that is another Fibonacci level at 1.2367.

GBP/USD Daily Chart

GBP/JPY

GBP/JPY printed an evening star formation that confirmed on Wednesday, and that led to a strong sell-off on Thursday and Friday. But similarly, there were some items of note at key support zones last week. I had looked at the 193.61-194.11 zone in the Wednesday article as this is the bottom portion of a gap from back in 2008. That area led to a bounce on Thursday but sellers caught the break on Friday, making a strong push down to a fresh monthly low.

For next week, the focus is on deeper support, looking to the 190.81 Fibonacci level which is nearing confluence with a bullish trendline drawn from August and December swing-lows.

GBP/JPY Daily Price Chart

EUR/GBP

As of this writing EUR/GBP has gained 1.09% this week, which would stand as the largest weekly gain for the pair since January of 2023. The pair rallied up to the 23.6% retracement of the two-year-move, and this follows almost two months of stalling after sellers were unable to elicit any significant bearish continuation below .8260.

EUR/GBP Weekly Price Chart

EUR/GBP Shorter-Term

Given the breakout to a fresh two-month high, the next natural question is whether a bullish trend can follow Given prior price structure, there’s now support potential around prior resistance, and I’m tracking this from around .8311 up to .8328. And for next resistance, there’s a prior swing-high at .8448 before the psychological level of .8500 would come back into play.

EUR/GBP Daily Price Chart

--- written by James Stanley, Senior Strategist