British Pound Forecast: GBP/USD Rally Halted at Resistance

British Pound Technical Forecast: GBP/USD Weekly Trade Levels

• British Pound rally exhausts into uptrend resistance- off more than 1.3% from yearly high
• GBP/USD risk for bull-market correction- remains constructive above 2024 yearly open
• Resistance 1.3273 (key), 1.3413, 1.3671/85– Support 1.3091, 1.30, 1.2731/73 (key)

The British Pound snapped a two-week winning streak last week with GBP/USD reversing off confluent uptrend resistance. The risk rises for a larger correction within the broader uptrend and the battle lines are drawn heading into September. These are the levels that matter on the GBP/USD weekly technical 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 noted that GBP/USD had, “been testing a major support pivot at the yearly open for the past three-weeks and the risk remains for possible inflection off this zone. The August opening-range is set, and the immediate focus is on a breakout of the 1.2670-1.2860 range for guidance.” We specifically noted the next major resistance hurdles, “at the 2023 HWC / 100% extension at 1.3091-1.3156 and the 2021 LWC at 1.3273- both levels of interest for possible topside exhaustion IF reached.” Sterling broke higher the following week with GBP/USD rallying 4.75% off the August lows. The advance exhausted just ahead of resistance last week with price registering an intraweek high at 1.3266 before reversing.

GBP/USD is now off more than 1.3% from the high with price testing initial support early in the week at the 2023 high-week close (HWC) at 1.3091. The immediate focus into the start of the month is on a breakout of this range (1.3091-1.3273). Subsequent support is eyed at the 1.30-handle with broader bullish invalidation now raised to 1.2731/73- a region defined by the 2024 objective yearly open and the February 2019 swing low. Note that pitchfork support converges on this threshold next month and losses would need to be limited to the lower parallel for the late 2022 uptrend to remain viable.

A breach / close above the median-line would be needed to mark uptrend resumption with subsequent resistance objectives eyed at the 78.6% Fibonacci retracement of the 2021 decline at 1.3413 and 1.3671/85- a region defined by the 1.6181% extension of the October rally and the objective 2022 HWC. Look for a larger reaction there IF reached.

Bottom line: The British Pound rally exhausted into uptrend resistance last week and although the broader outlook is still constructive, the risk remains for a bull market correction towards trend support. From a trading standpoint, losses should be limited to the 1.30-handle IF price is heading higher on this stretch with a close above 1.3273 needed to fuel the next leg in price.  

Keep in mind the monthly opening-range is just now taking shape below resistance- we’ll be looking for a breakout to offer further guidance. US non-farm payroll on tap Friday- stay nimble into the release and watch the weekly close here. 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