British Pound Technical Outlook: GBP/USD Short-Term Trade Levels
- GBP/USD has broken the December uptrend after exhausting just ahead of resistance, marking a notable shift in near-term structure.
- The pullback extended nearly 1.3% off the highs before rebounding, with the weekly opening-range now defined just above the 200-day moving average- breakout pending
- Resistance 1.3474, 1.3500/02 (key), 1.3528- Support 1.3391/94 (key), 1.3345/55, 1.3318
GBP/USD has turned lower after breaking the December uptrend, with price retreating from resistance and shifting focus toward support near the weekly opening-range low. The rebound earlier in the week has established this area as a key near-term pivot. Price behavior here will be important in assessing whether the move represents a corrective retracement within a broader consolidation or the early stages of a more persistent decline. Battle lines drawn 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 range bound just below resistance and that, “While the broader outlook remains constructive, the immediate advance may be vulnerable while below this pivot zone. From a trading standpoint, losses would need to be limited to 1.3269 for the November uptrend to remain viable with a breach above 1.3453 needed to fuel the next major leg of the advance.” Sterling broke higher the following week with the rally exhausting just ahead of resistance into the start of the year at 1.3573/93- a region defined by the 78.6% retracement of the September decline and the May / August swing high.
The pullback extended nearly 1.3% off the highs before rebounding into the start of the week with an outside-day reversal off the 200-day moving average on Monday defining the weekly opening-range. Look for a breakout of this candle on a daily close basis to drive the next move in GBP/USD.
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 a descending pitchfork extending off the December / January highs. Note that last week’s break of the December uptrend (red) has been tested as resistance over the past two-days and suggests a deeper correction may be underway here.
Yearly open resistance is eyed at 1.3474 and is backed by near-term bearish invalidation at the 61.8% retracement of the monthly range and the monthly high-day close (HDC) at 1.3500/02. Ultimately, a breach / daily close above the October high at 1.3528 is needed to put the bulls back in control here with key resistance steady at 1.3573/93.
Initial support rests with the weekly opening-range low / 200-day moving average at 1.3391/95. More significant support objectives are seen at the September low-day close (LDC) and the 38.2% retracement of the November rally at 1.3345/55 and the 100% extension of the monthly decline at 1.3318. Both levels represent areas of interest for possible downside exhaustion / price inflection IF reached. Losses surpassing this threshold would suggest a more significant high is in place and a larger trend reversal is underway towards the November high at 1.3269.
Bottom line: A break of the December channel is threatening a larger pullback here with the weekly range set just above the 200-day moving average. From a trading standpoint, rallies should be limited to 1.35 IF price is heading lower on this stretch with a break below 1.3392 needed to fuel the next leg of the decline.
Event risk is limited until next week with key employment & inflation data from the UK and the Fed’s preferred inflationary gauge (PCE) on tap. Stay nimble into these releases and watch the weekly close for guidance here. I’ll publish an updated British Pound Weekly Forecast once we get further clarity on the longer-term GBP/USD technical trade levels.
Key GBP/USD Economic Data Releases
--- Written by Michael Boutros, Senior Technical Strategist
Follow Michael on X @MBForex
