British Pound Forecast: GBP/USD Plunges to Critical Support

British Pound Technical Forecast: GBP/USD Weekly Trade Levels

• British Pound falls 4.78% off yearly high, now approaching yearly trend support
• GBP/USD threat for downside exhaustion / price inflection- US CPI, Retail Sales on tap
• Resistance 1.29, 1.3045, 1.3112 (key)- Support 1.2731/89 (key), 1.2494-1.2542, 1.2397

The British Pound has plummeted nearly 4.8% off the yearly highs with GBP/USD now approaching major support at the yearly uptrend. While the near-term outlook remains weighted to the downside, the immediate decline may be vulnerable into this threshold and the battle lines are drawn heading into the close of the week. 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 last month’s British Pound Weekly Forecast we noted that the GBP/USD was testing, “Fibonacci support with the lower bounds of the multi-year uptrend just lower. From a trading standpoint, rallies should be limited to 1.3122 IF price is heading lower on this stretch with a close below 1.29 needed to fuel a test of yearly-open support.”

Sterling is attempting to break support at the 1.29-handle for a fourth week with price now within striking distance of a key technical confluence 1.2733/89- a region defined by the objective 2024 yearly open, the 61.8% retracement of the yearly range, the February 2016 swing low and the 52-week moving average. Looking for a larger reaction there IF reached with the near-term short-bias vulnerable into this level.

Initial weekly resistance is eyed at the July high (also the November opening-range high) at 1.3045 backed by the median-line / September reversal close at 1.3122- a breach / weekly-close above this threshold is needed to suggest a more significant low was registered / mark uptrend resumption. Subsequent topside objective eyed at the 2021 low-week close (LWC) at 1.3273.

A break / close below the 2023 pitchfork would invalidate the yearly uptrend and exposes a possible drop towards the 2024 LWC / 78.6% retracement at 1.2494/-1.2542 and the January 2023 high-week close (HWC) at 1.2397 - both levels of interest of possible downside exhaustion / price inflection IF reached.

Bottom line: The Sterling sell-off is now approaching technical support at the yearly uptrend- risk for possible exhaustion / price inflection down here. From at trading standpoint, look to reduce short-exposure / raise protective stops on a stretch towards the yearly open- rallies would need to be limited to 1.29 IF price is heading for a larger break with a close below 1.2731 needed to fuel the next leg of the decline.

Keep in mind we have key US inflation and retail sales data on tap from the US this week. Stay nimble into the releases and watch the weekly close 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.

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

Follow Michael on X @MBForex