Sterling plummeted to a six-month low post-Fed with the bears testing pivotal support into the monthly close. Battle lines drawn on the GBP/USD weekly technical charts.
By : Michael Boutros, Sr. Technical Strategist
British Pound Technical Forecast: GBP/USD Weekly Trade Levels
- British Pound extends losses with a break below the October range reaching the lowest levels since April
- GBP/USD testing pivotal support into monthly close- ADP, BoE on tap next week
- Resistance 1.3280, 1.3434/69 (key), 1.3648- Support 1.3140/43, 1.3080/87 (key), 1.2944
The British Pound is poised to mark a second weekly decline with GBP/USD plunging to six-month lows in the wake of the Fed rate decision. A break of the October range has now extended nearly 4.9% off the yearly highs and keeps the focus on a pivotal support zone into the November open. Battlelines drawn on the GBP/USD weekly technical chart as traders look ahead to the Bank of England interest rate decision.
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British Pound Price Chart – GBP/USD Weekly
https://preview.redd.it/h4g3trifcbyf1.png?width=1015&format=png&auto=webp&s=c32fdf7baad09d107f7320a8626c009359229569
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 was testing, “confluent uptrend support at the median-line and the immediate focus is on a breakout of the October opening-range for guidance. From a trading standpoint, rallies should be limited to 1.3544 IF price is heading for a break lower on this stretch with a close below 1.3267 needed to fuel the next leg of the decline.” Price briefly registered an intraday high at 1.3471 in the following days before reversing sharply lower with Sterling plunging through confluent support yesterday on the heels of the Fed. The decline has extended more than 3% off the October high with price now testing a key pivot zone into the monthly close- risk for inflection off this mark in the days ahead.
Initial weekly support rests at 1.3140/43- a region defined by the May and July lows, the 2023 swing high, and the 38.2% retracement of the yearly range. Confluent support sits just lower at the 100% extension of the June decline and the 52-week moving average at 1.3080/88. Look for a larger reaction there IF reached with a break / weekly close below exposing the 50% retracement at 1.2944. Note that the 25% parallel converges on this threshold early next month, making it an area of interest for potential downside exhaustion / price inflection.
Weekly resistance stands back at the July low-week close (LWC) at 1.3280 and is backed closely by the median-line. Broader bearish invalidation is now lowered to the 2024 swing high / September high-week close (HWC) at 1.3434/69- strength beyond this threshold would be needed to suggest a more significant low is in place / threaten resumption of the broader uptrend. Subsequent resistance objectives eyed at the yearly HWC at 1.3648.
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Bottom line: Sterling broke below the October opening-range lows yesterday and while the decline does threaten a deeper pullback, the immediate focus is on a reaction off this support pivot into the monthly cross. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be limited to the median-line IF price is heading lower on this stretch with a close below 1.3080 needed to fuel the next major leg of this decline.
Non-Farm Payrolls will be postponed for a second month amid the ongoing U.S. government shutdown, and traders will be closely watching Wednesday’s ADP employment report for insight into labor market conditions. Keep in mind that the Bank of England interest rate decision is on tap Thursday, with the central bank widely expected to keep rates unchanged. Stay nimble into the monthly cross and watch the weekly closes here for guidance. Review my latest British Pound Short-term Outlook for a closer look at the near-term GBP/USD technical trade levels.
GBP/USD Economic Data Releases
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--- Written by Michael Boutros, Sr Technical Strategist
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