British Pound short-term outlook: GBP/USD threatens correction

British Pound technical outlook: GBP/USD short-term trade levels

• British Pound marks outside-reversal off resistance – down more than 1.5%
• GBP/USD at risk for further losses near-term within broader uptrend
• Sterling resistance 1.2413, 1.2447, 1.2526 (key)- support 1.2333, 1.2263, 1.2087

The British Pound plunged more than 1.5% off fresh yearly highs registered on Friday with Sterling threatening a larger correction within the broader uptrend. These are the updated targets and invalidation levels that matter on the GBP/USD short-term technical charts.

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British Pound Price Chart – GBP/USD Daily

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

Technical Outlook: The March rally now defines the yearly range in the British Pound with GBP/USD marking an outside-day reversal off fresh yearly highs just above the April opening-range highs at 1.2526. The immediate focus is on a breakout of the monthly opening-range with the broader long-bias at risk while below Friday’s high.

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 multi-week channel support (red) with a proposed pitchfork off the highs (blue) offering some guidance this pullback. Initial support rests with the objective monthly open at 1.2333 and is backed by the 38.2% Fibonacci retracement of the yearly range at 1.2263- both levels of interest for possible exhaustion / price inflection IF reached. Losses below this threshold would threaten a much steeper setback towards key support / broader bullish invalidation at 1.2084/87- a region defined by the objective yearly open and the 61.8% retracement.

Weekly open resistance stands at 1.2413 backed by the December high at 1.2447. Rallies should be limited by this region IF price is heading lower on this stretch. Ultimately, a breach / daily close above the 1.2526 is needed to mark resumption of the broader uptrend towards the May high at 1.2667 and the 61.8% retracement of the 2021 decline at 1.2757.

Bottom line: A failed attempt to breach the yearly opening-range / December highs keeps the immediate focus on a breakout of the monthly opening-range. From at trading standpoint, the near-term threat is lower while below 1.2447 – look for a reaction on a stretch into the lower parallels for guidance IF reached. Review my latest British Pound Weekly Forecast for a closer look at the longer-term GBP/USD trade levels.

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