British Pound Forecast: GBP/USD Breakout Stalls into Q4 Open

British Pound Technical Forecast: GBP/USD Weekly Trade Levels

British Pound September breakout stalls at initial resistance- outlook remains constructive
GBP/USD immediate advance may be vulnerable into monthly cross- NFPs on tap
Resistance 1.3414, 1.3500/15, 1.3671/85 (key)– Support 1.3091, 1.30, 1.2731/73 (key)

The British Pound marked a second weekly advance on Friday as the September opening-range breakout extended to fresh yearly highs. The rally was halted this week at technical resistance and although the broader outlook remains weighted to the topside, we note the risk for possible exhaustion / price inflection heading into the close of the month / quarter with bearish momentum divergence beginning to surface on tighter timeframes. These are the levels that matter 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 had, “trading just below trend resistance with the September opening-range intact heading into the FOMC and BoE interest rate decisions. The immediate focus is on a breakout with the long-bias vulnerable sub-1.3273. From a trading standpoint, losses should be limited to 1.2731 IF Sterling is heading higher on this stretch with a close above the median-line needed to mark uptrend resumption.” GBP/USD broke through resistance just two-days later with the advance extending more than 3.3% off the monthly low.

The rally stalled at initial resistance this week at the 78.6% retracement of the 2021 decline near 1.3414 – a topside breach / close above this threshold would expose subsequent objectives at the 2009 low / 2019 high at 1.3500/15 and 1.3671/85- a region defined by the 1.618% extension of the October advance and the 2022 high-week close (HWC). Look for a larger reaction there IF reached.

Initial weekly support now rests back at former resistance near 1.3273 (2021 LWC) and is backed by the 1.30-handle. Broader bullish invalidation now raised to the objective yearly open / February 2019 swing low at 1.2731/73.

Bottom line: The British Pound September breakout is testing initial hurdles here at Fibonacci resistance. From a trading standpoint, losses should be limited to 1.3273 IF Sterling is heading higher on this stretch with a close above 1.3414 needed to fuel the next leg in price.

Keep in mind GBP/USD is trading at fresh yearly highs heading into the close of the month / quarter with US Non-Farm Payrolls on tap Friday. A good time to reduce position size and re-adjust protective stops. Stay nimble into the monthly cross and watch the weekly closes for guidance here. 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

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