British Pound Short-term Outlook: GBP/USD Rips to Resistance

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

• British Pound attempts 5^th consecutive daily advance- rallies 1.26% off monthly low
• GBP/USD bulls now testing key pivot zone- August opening-range intact ahead of UK/US CPI
• Resistance 1.2810/16, 1.2855/57 (key), 1.2900- Support 1.2731, 1.2663/72 (key), 1.2584

The British Pound surged nearly 1.3% off the monthly lows with GBP/USD now testing a major technical pivot-zone. The focus is on possible exhaustion / price inflection into this threshold over the next few days with key US inflation data on tap tomorrow. Battle lines drawn on the Sterling short-term technical charts.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this GBP/USD 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 major technical support at the lower bounds of a multi-month uptrend support. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops – rallies should be limited to the weekly opening-range highs IF price is heading lower here with a break / weekly close below the yearly open needed to fuel the next leg lower in price.”

Sterling mounted a recovery of more than 1% the following day but failed well-ahead of the weekly highs with the subsequent break below the yearly-open fueling a decline into the 50% retracement of the yearly range at 1.2672. Another V-shaped recovery off the lows now takes GBP/USD back into a key pivot-zone at 1.2810/57- a region defined by the 38.2% retracement of the July decline, the July weekly reversal close, the objective August open, and the March high-day close (HDC). Looking for possible exhaustion / price inflection into this zone 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 breaking out of a multi-week descending channel last week (red) with a proposed descending pitchfork formation (blue) extending off the highs offering some guidance on this decline. Initial resistance is being tested here at 1.2810/16 with a breach / close above 1.2855/57 needed suggest a more significant reversal is underway towards the 61.8% Fibonacci retracement at 1.29- look for a larger reaction there IF reached.

Initial support rests with the objective yearly open at 1.2731 and is backed by the highlighted confluence zone around the 200-day moving average / 50% retracement at 1.2663/72- a break / daily close below this threshold is needed to mark downtrend resumption towards the 61.8% retracement at 1.2584.

Bottom line: The British Pound recovery is now testing a major technical pivot zone and the focus is on possible inflection into this threshold in the days ahead. From at trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops- losses would need to be limited to the yearly open IF price is heading higher on this stretch with a close above 1.2855 needed to suggest a more significant low is in place.

Keep in mind we get the release of key inflation data tomorrow from the UK and the US with the July Consumer Price index on tap. Stay nimble into the release and watch the weekly close here – ultimately, we’re looking for a breakout of the objective August opening-range for guidance. 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