British Pound Forecast: GBP/USD Recovery Hinges on NFP, BoE

British Pound Technical Forecast: GBP/USD Weekly Trade Levels

• British Pound marks outside-weekly reversal off key technical support
• GBP/USD recovery checking initial resistance at yearly moving average- NFP, BoE on tap
• Resistance 1.2566/73, 1.2667, 1.2773-1.2816 (key)– Support 1.2364/97, 1.2237, 1.2084-1.2113

The British Pound is on defense this week after rallying nearly 2.2% off the yearly lows. A rebound off key technical support is now testing initial resistance and the focus heading into the May opening-range remains on this near-term recovery within the March downtrend. These are the updated targets and invalidation levels that matter on the GBP/USD weekly chart heading into May trade.

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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 that GBP/USD had been testing, “key technical support at the yearly lows for the past two-weeks and the focus is on a breakout of the April opening-range for guidance here. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops – rallies should be limited to 1.2816 IF price is heading lower with a break / close below 1.2566 needed to fuel the next leg in price.”

GBP/USD registered an intraday high at 1.2709 the following week before marking an outside-weekly reversal with a 3.2% decline taking price into key support last month at 1.2364/97-  a region defined by the 61.8% Fibonacci retracement and the January 2023 high-week close (HWC). We continue to reserve this threshold as our broader bullish invalidation level.

An outside-weekly reversal last week defended this critical support zone with a rally of nearly 2.2% now testing initial resistance at the 52-week moving average / 38.2% retracement of the October rally at 1.2566/73. A topside breach / weekly close above is needed to suggest a more significant low may have been registered last week with subsequent resistance objectives eyed at the 61.8% retracement at 1.2667 and the February 2019 low / July reversal-close at 1.2773-1.2816- an area of interest for possible topside exhaustion / price inflection IF reached.

A break / close below this key support zone would be needed to suggest a larger trend reversal is underway with subsequent support objectives eyed at the October low-week close (LWC) at 1.2237 and the 2023 yearly open / 2023 LWC at 1.2084-1.2113- look for a larger reaction there IF reached.

Bottom line: Sterling marked and outside-week reversal off confluent, multi-year uptrend support last week with price threatening the March downtrend. From a trading standpoint, losses should be limited to 1.2364 IF price is heading higher on this stretch – ultimately, we’re on the lookout for an exhaustion high while below the 1.28-handle with a break / close below this formation needed to mark resumption of the multi-month downtrend.  

Keep in mind we get the release of US Non-Farm Payrolls (NFP) tomorrow with the Bank of England (BoE) interest rate decision on tap next week. Stay nimble into the releases and watch the weekly closes for guidance here. I’ll publish an updated British Pound Short-term Outlook one 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