British Pound Short-term Outlook: GBP/USD Stalls at Pivotal Resistance

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

• British Pound breaks September downtrend / January & February range highs- rallies 3.2% off monthly lows
• GBP/USD weekly opening-range breakout in focus- outlook constructive above monthly open
• Resistance 1.2609/13, 1.2673, 1.2731/89 (key)- Support 1.2487-1.2513, 1.2395 (key), 1.2349

The British Pound broke through a multi-month downtrend and the February opening range last week with the rally extending nearly 4.5% off the yearly low. The bulls have stalled at initial resistance this week and we’re looking for potential inflection off this mark. 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 last month’s British Pound Short-term Outlook, we noted that GBP/USD was approaching yearly open-resistance and that, “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.” Sterling plunged into the February open to briefly register an intraday low at 1.2249 before reversing sharply with GBP/USD closing markedly higher on the day (false break). The subsequent rally has now extended more than 3.2% off the monthly low with a breakout of the September downtrend clearing the February opening-range.

The rally is straddling near-term resistance at the 38.2% retracement of the September decline / June & July lows around 1.2609/13- risk for inflection here with the medium-term outlook still constructive while above the objective monthly open.

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 median-line being challenged today ahead of the U.S. open. A break of the weekly opening-range lows would threaten a deeper pullback here towards the 25% parallel with near-term bullish invalidation now set to the November low / 2025 yearly open at 1.2487-1.2514. Ultimately, a break / close below the February open at 1.2394 would be needed to mark downtrend resumption.

Topside resistance objectives are eyed at the 100% extension of the January advance at 1.2673 and 1.2731/89- a region defined by the 2024 yearly open, the February 2019 swing low and the 200-day moving average. A breach / close above this threshold would be needed to suggest a more significant low was registered last month / a larger trend reversal is underway. Look for a larger reaction there IF reached with subsequent resistance seen at the March high-day close (HDC) at 1.2857 and the 1.29-handle.

Bottom line: The British Pound has broken out of a multi-month downtrend with the rally now testing initial resistance hurdles. From a trading standpoint, losses should be limited to 1.2487 IF price is heading higher on this stretch with a close above 1.2673 needed to fuel the next leg of the advance.

Keep in mind we get U.S. 4Q GDP figures and key inflation data next week. Stay nimble into the releases and watch the weekly closes here for guidance. 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

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

Follow Michael on X @MBForex