British Pound Forecast: GBP/USD Bulls Face Off with Fed, BoE

British Pound Technical Forecast: GBP/USD Weekly Trade Levels

• British Pound holding well-defined range just below resistance for a seventh-week
• GBP/USD January monthly opening-range breakout imminent- FOMC, BoE on tap
• Sterling resistance 1.2773-1.2816, 1.2906 (key), 1.3091– Support 1.2525, 1.2490, 1.2339/97

The British Pound has continued to trade with the January opening-range with price holding just below major technical resistance for the seventh consecutive week. The Sterling battle lines are drawn heading into key interest rate decisions form the Federal Reserve and the Bank of England. These are the updated targets and invalidation levels that matter on the GBP/USD weekly chart.

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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 my last British Pound Weekly Forecast we highlighted that GBP/USD had, “held confluent resistance for over a month with the January opening-range taking shape just below.” Our focus was on a breakout of that week’s range for guidance with the broader outlook constructive while above the 52-week moving average. It’s been nearly four-weeks and heading into the February open, the outlook remains virtually unchanged with Sterling continuing to trade within the confines of the initial January weekly range. A breakout is imminent.

The focus remains on this key resistance pivot at 1.2773-1.2816- a region defined by the February 2019 swing low and the July weekly-reversal close (also the monthly range highs). A breach / weekly close above the 78.6% retracement of the July decline at 1.2906 is still needed to fuel the next leg higher towards subsequent objectives at the 2023 high-week close near 1.3091 and beyond.

Weekly support rests with the 38.2% retracement of the October rally at 1.2525 and is backed closely by the 52-week moving average (currently ~1.2490). Key support / bullish invalidation remains unchanged at the 61.8% Fibonacci retracement / January high-week close at 1.2339/97- look for a larger reaction there IF reached with a weekly close below ultimately needed to suggest a larger trend reversal is underway.

Bottom line: Sterling has coiled within the confines of the initial weekly range of the year / month and we’re on the lookout for a breakout in the days ahead to offer guidance. From a trading standpoint, losses should be limited to 1.2525 IF price is heading higher on this stretch with a weekly close above 1.2906 ultimately needed to fuel the next leg higher in price. Keep in mind we get the release of the FOMC interest rate decision later today with the BoE on tap tomorrow- stay nimble into the releases and watch the weekly close here for guidance. Review my latest British Pound Short-term Outlook for a closer look at 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