British Pound Short-Term Outlook: GBP/USD Breakout Looms

British Pound Technical Outlook: GBP/USD Short-Term Trade Levels

• British Pound October rally falters into technical resistance- risk for near-term correction
• GBP/USD monthly/weekly opening-range breakouts pending
• Resistance 1.2773-1.2823 (key), 1.2906, 1.30 - Support ~1.2675, 1.2610/23, 1.2525/54

The British Pound is trading just below confluent resistance with the weekly & monthly opening-ranges taking shape just below. The October uptrend is now in question with the immediate focus on a possible breakout in the days ahead. These are the updated targets and invalidation levels that matter on the GBP/USD short-term technical charts.

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 Daily

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

Technical Outlook: In last month’s British Pound Short-term Outlook we noted that GBP/USD was testing uptrend resistance and that, “losses should be limited by the 1.2446 on pullbacks IF price is heading higher with a close above 1.2720 needed to fuel the next leg higher in price.” Sterling plunged more than 1.8% off the early-December highs with price registering an intraday low at 1.2502 before reversing sharply.

The subsequent rally failed at confluent resistance on bearish momentum divergence late in the month at 1.2773-1.2823 – a region defined by the February 2019 swing low and the June 2023 high-day close (HDC). Note that the January opening-range high is now defined by this threshold and the immediate focus is on a breakout to offer guidance in the days ahead.

British Pound Price Chart – GBP/USD 240min

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

Notes: A closer look at Sterling price action shows GBP/USD continuing to trade within the confines off the ascending pitchfork we have been tracking for nearly three-months now. The weekly / monthly opening-ranges have been consolidating between uptrend support and this key resistance pivot- look for the break.

Initial support rests with the lower parallel (currently ~1.2675) – a break / close below this slope would threaten a deeper correction in GBP/USD. Initial support objectives eyed at the December-open / January range-low at 1.2610/23 and a more significant confluence zone at 1.2525/54- a region defined by the 38.2% Fibonacci retracement of the October rally, the 200-day moving average and the 100% extension of the December decline. Look for a larger reaction there IF reached.

A topside breach / close above 1.2823 is still needed to mark uptrend resumption with such a scenario exposing the median-line / 78.6% retracement at ~1.2906 and the 1.30-handle.

Bottom line: Sterling has carved well-defined weekly / monthly opening-ranges – immediate focus is on a breakout with the long-bias vulnerable while below the December high. From a trading standpoint, the risk remains for a deeper correction after the 6.57% rally off the October lows- we are on the lookout for a possible exhaustion low in the weeks ahead with a close above 1.2823 ultimately needed to fuel the leg higher in price towards the median-line.

Keep in mind we get the release of key US inflation data tomorrow with UK employment & CPI slated for next week- stay nimble here until we get evidence of a breakout. Review my latest British Pound Weekly Forecast for a closer look at the longer-term GBP/USD trade levels.

Key GBP/USD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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

Follow Michael on X @MBForex