British Pound Forecast: GBP/USD at Key Pivot Zone- Fed, BoE on Tap

British Pound Technical Forecast: GBP/USD Weekly Trade Levels

• British Pound off 1.82% from monthly / yearly high- now testing key support pivot
• GBP/USD risk for downside exhaustion / price inflection into July close- FOMC, BoE, NFPs on tap
• Resistance 1.2934, 1.30, 1.3091-1.3156 – Support 1.2773-1.2816, 1.2584/91, 1.2493

The British Pound is poised to mark a third weekly-decline with GBP/USD off more than 1.8% from a fresh yearly high. The decline takes Sterling into support at former resistance and the first major hurdle for the bears- battle lines drawn on the GBP/USD weekly technical chart heading into August.

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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 to be, “on the lookout for a possible exhaustion low while above 1.2493 IF price is heading higher on this stretch with a breach/close above 1.2816 needed to fuel the next major leg in price.” GBP/USD registered a low at 1.2613 that week before turning sharply higher into the July open with a break above key resistance fueling a rally of more than 3.4%. Sterling briefly registered an intraday high at 1.3044 before exhausting with a three-week pullback now approaching support at former resistance- the focus is on possible inflection here in the weeks ahead.

The support zone in focus is 1.2773-1.2816- a region defined by the February 2019 low and the 2023 July reversal-close. A break / weekly close below this pivot zone would threaten a larger correction towards the 61.8% Fibonacci retracement of the April advance / 52-week moving average at 1.2584/92- look for a larger reaction there IF reached. Subsequent support objectives seen at the yearly low-week close (LWC) at 1.2494 and the 61.8% retracement of the yearly range / January high-week close (HWC) at 1.2364/97.

Initial weekly resistance remains with the 1.30-handle and is backed by the 2023 HWC / 100% extension of the October advance at 1.3094-1.3156. Ultimately, a breach / close above the median-line near the 2021 LWC at 1.3273 would be needed to fuel the next major leg in price towards the 2022 highs.

Bottom line: The reversal off fresh yearly highs takes GBP/USD back into support at former resistance- looking for a reaction here with the immediate short-bias vulnerable while above 1.2773. From a trading standpoint, a good region to reduce short-exposure / lower protective stops- rallies should be limited to the yearly HWC at 1.2934 IF price is heading lower here but ultimately, we’re looking for a low ahead of 1.2584 in the weeks ahead.

Keep in mind the Federal Reserve & Bank of England interest rate decisions are on tap over the next two days with US Non-Farm Payrolls slated for Friday. Stay nimble into the August open and watch the weekly close here for guidance. I’ll publish an updated British Pound Short-term Outlook once we get further clarity on the near-term GBP/USD technical trade levels.

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

Follow Michael on X @MBForex