CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% 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.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% 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.

British Pound Forecast: GBP/USD Battlelines Drawn at Key Pivot Zone

Article By: ,  Sr. Technical Strategist

British Pound Technical Forecast: GBP/USD Weekly Trade Levels

  • British Pound trading into major pivot-zone post-BoE - poised for February breakout
  • GBP/USD bears vulnerable above weekly low- U.S. Non-Farm Payrolls on tap
  • Resistance 1.2494 (key), 1.2609, 1.2731/73- Support 1.2272, 1.2084-1.2114 (key), 1.1841/89

The British Pound is poised for a breakout in the days ahead with GBP/USD trading into a key pivot-zone on the heels of today’s Bank of England interest rate cut. The focus is on possible price inflection off this zone in the days ahead with U.S. Non-Farm Payrolls on tap tomorrow. Battle lines drawn on the GBP/USD weekly technical chart.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling setup and more. Join live on Monday’s at 8:30am EST.

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, “A four-month sell-off takes GBP/USD into pivotal support – risk for possible inflection off this zone. From a trading standpoint, a good region to reduce short-positioning / lower protective stops- rallies should be limited to 1.2397 IF price is heading lower on this stretch…” Sterling reversed sharply higher the following week with a pivot above the 1.24-handle extending into channel resistance this week.

The immediate focus is on this week’s close with respect to the 1.2367-1.2397 pivot zone- a region defined by the April low-close, and the 2023 January high-week close (HWC) / May low-week close (LWC). A look at the line-chart below illustrates the magnitude of the price inflections off this zone over the past two-years – looking for a reaction here early in the month.

British Pound Price Chart – GBP/USD Weekly

 

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

Weekly resistance remains with the 2024 LWC at 1.2494 with a close above the September channel needed to suggest a more significant low was registered last month / a larger reversal is underway. Subsequent resistance objective eyed at the 38.2% retracement at 1.2609 and the 2024 yearly open / 55-week moving average / February 2019 low at 1.2731/73- look for a larger reaction there IF reached.

 A close below this pivot zone would once again expose the 61.8% retracement at 1.2272 with key support unchanged at the 2023 yearly open / 2023 LWC at 1.2084-1.2114. A break / close below this threshold is needed to mark downtrend resumption towards the January 2024 low / 50% retracement of the 2022 advance at 1.1841/89.

Bottom line: Sterling is trading into a major pivot zone- looking for possible price inflection off the 1.2367-1.2397 range. From a trading standpoint, losses would need to be limited to this week’s low IF price is heading for a breakout on this stretch with a close above channel resistance needed to clear the way for a larger advance.

Keep in mind we get the release of US Non-Farm Payrolls tomorrow with key inflation data on tap next week. Stay nimble into the releases and watch the weekly closes 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.

Active Weekly Technical Charts

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

Follow Michael on X @MBForex

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