British Pound Short-term Outlook: GBP/USD Threatens Major Breakout

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

• British Pound attempting fourth daily advance- marks third attempt to breach 2024 highs
• GBP/USD risk for price inflection off this mark- U.S. Core PCE on tap into monthly close
• Resistance 1.3414/34, 1.3515 (key), 1.36- Support 1.3328, 1.3280, 1.3207 (key)

The British Pound is attempting to mark a fourth consecutive daily advance with GBP/USD once again rallying into critical resistance at the 2024 yearly high- moment of truth for the bulls. 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 the, “rally off the yearly lows has extended into uptrend resistance at the yearly highs on building bearish momentum divergence- mounting risk for exhaustion here.” GBP/USD plunged more than 2.25% from the highs with price briefly registering an intraday low at 1.3140 before rebounding. The rally is once again approaching key resistance at the yearly highs and the focus is on possible price inflection off this key pivot zone with the bulls vulnerable while below.

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 continuing to trade within the confines of an ascending pitchfork extending off the yearly low with 75% parallel catching the intraday highs yesterday. Resistance is being challenged again today at the 78.6% retracement of the 2021 decline / 2024 swing high around 1.3414/34 with the 2019 high at 1.3515- A topside breach / close above this threshold would be needed to fuel the next major leg of the advance towards the 1.36-handle and the 2022 high-day close (HDC) at 1.3705.

Initial support rests with the May open at 1.3328 and is backed closely by the objective weekly open at 1.3281. Near-term bullish invalidation is now raised to the April opening-range highs (ORH) at 1.3207- losses below this threshold would suggest a more significant high was registered this week / a larger Sterling correction is underway.

Bottom line: The British Pound is testing technical resistance again here and while the broader outlook remains constructive, the immediate focus is on a close above this level. From a trading standpoint, losses should be limited to the monthly open IF price is heading for a breakout on this stretch with a breach / close above 1.3515 ultimately needed to mark resumption of the yearly uptrend.

Keep in mind we are heading into an extended holiday weekend (Memorial Day) with key U.S. inflation data on tap into the close of the week / month. 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

Active Short-term Technical Charts

• Australian Dollar Short-term Outlook: AUD/USD Breakout Imminent
• Gold Short-term Outlook: XAU/USD Bulls Defend Make-or-Break Support
• Canadian Dollar Short-term Outlook: USD/CAD Breakout Looms
• Euro Short-term Outlook: EUR/USD Recovery Stalls at Trend Resistance
• Swiss Franc Short-term Outlook: USD/CHF Bulls Tested at Resistance
• Japanese Yen Short-term Outlook: USD/JPY Rejected at Trend Resistance
• US Dollar Short-term Outlook: USD Bulls Steady After Fed Decision

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

Follow Michael on X @MBForex