British Pound Short-term Outlook: GBP/USD Bulls Eye Resistance

British Pound Technical Outlook: GBP/USD Short-Term Trade Levels

British Pound tries to erase monthly losses- Sterling rallies 3.5% into yearly open resistance
GBP/USD weekly opening-range in focus heading into FOMC, U.S. 4Q GDP & key inflation data
Resistance 1.2487-1.2514, 1.2575-1.2613 (key), 1.2731/73- Support 1.2415, 1.2349, 1.23(key)

The British Pound staged the largest single-week rally since November 2022 last week with GBP/USD rebounding sharply back into yearly open resistance. The weekly opening-range has taken shape just below resistance and the battle lines are drawn heading into the FOMC rate decision and key inflation data this week. These are the levels that matter on the GBP/USD short-term technical charts.

British Pound Price Chart – GBP/USD Daily

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

Technical Outlook: In my last British Pound Short-term Outlook, we noted to look for possible inflection as GBP/USD was testing slope support with, “the next major technical considerations at the 2023 objective yearly open (1.2084) and the October 2023 swing low at 1.2337- both levels of interest for possible downside exhaustion / price inflection IF reached.” Sterling broke lower the following day with price registering an intraday low at 1.2099 before rebounding sharply.

The subsequent rally extended 3.5% off the lows with the bulls nearly erasing the entire monthly decline. The immediate focus is on this reaction into yearly open-resistance at 1.2514 with the objective weekly opening-range taking shape just below- looking for a breakout in the days ahead.

British Pound Price Chart – GBP/USD 240min

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

Notes: A closer look at Sterling price action shows GBP/USD trading within the confines of an ascending pitchfork with the lower parallel now highlighting near-term support at the 23.6% retracement of the September decline at 1.2415. A break below this threshold would threaten a deeper pullback towards the 2024 low-day close (LDC) at 1.2349 and the 2024 swing low at the 1.23-handle- losses below this level would suggest a more significant high was registered / threaten downtrend resumption. Subsequent support eyed at the yearly LDC at 1.2202 with 1.20347/84 still critical.

A topside breach / close above 1.2514 exposes key resistance at 1.2575-1.2613- a region defined by the January high, the 38.2% retracement, and the June / July swing lows. Look for a larger reaction there IF reached with a breakout needed to suggest a more significant trend reversal is underway towards key resistance at the 2024 yearly open / February 2019 low at 1.2731/73.

Bottom line: The British Pound rallied back in to yearly open-resistance with the weekly opening-range taking shape just below- the immediate focus in on a breakout here with the recent recovery vulnerable into the yearly open. From a trading standpoint, losses would need to be limited to 1.23 IF price is heading for a larger recovery here with a breach above 1.2613 ultimately needed to suggest a more significant reversal is underway.

Keep in mind the Federal Reserve interest rate decision is slated for tomorrow with Q4 GDP and key inflation data (US core PCE) on tap into the close of the week. Stay nimble into the releases and watch the weekly close for guidance here. Review my latest British Pound Weekly Forecast for a closer look at the longer-term GBP/USD technical trade levels.

Key GBP/USD Economic Data Releases

Active Short-term Technical Charts

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

Follow Michael on X @MBForex

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.