British Pound, GBP/USD, Descending Channel – Technical Update:
- British Pound clocked in a 4th consecutive weekly loss
- GBP/USD has also confirmed a key trendline breakout
- Descending Channel remains in focus on 4-hour chart
The British Pound weakened about -0.4 percent against the US Dollar last week. At 4 consecutive weeks of losses, this has been the worst losing streak for GBP/USD since May 2022. A 5th would mean the worst since December 2018.
Taking a look at the daily chart below, GBP/USD has confirmed a breakout under the rising trendline from last year. As the new trading week beings, Sterling sits right on the 1.268 inflection point. Clearing lower opens the door to facing the 100-day Moving Average (MA) as well as the late June low of 1.2592. These may reinstate and upside focus.
Otherwise, further losses may open the door to revisiting the May low of 1.2308. In the event of a turn higher, keep a close eye on the 1.2848 inflection zone. Extending above this price may open the door to extending upward towards the July high.
Taking a closer look at the 4-hour timeframe reveals that GBP/USD remains in a bearish technical bias. Sterling has been aiming lower within the boundaries of a Descending Channel. This past week, prices tested the ceiling before turning lower towards the floor. On this timeframe, immediate support seems to be the 61.8% Fibonacci retracement level of 1.2626.
It should also be noted that a bearish Death Cross between the 50- and 100-period MAs remains in play and has helped bolster the near-term bearish technical bias. Clearing 1.2626 exposes the floor of the channel, which may offer support as prices near the 78.6% Fibonacci retracement level of 1.2486. Otherwise, confirming a breakout above the channel offers a near-term bullish perspective.
--- Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
