British Pound, GBP/USD, GBP/JPY – Technical Update:
- The British Pound is appearing more vulnerable
- GBP/USD downtrend faces next support point
- GBP/JPY Bearish Death Cross is now in focus
The British Pound appears to be increasingly vulnerable against the US Dollar and Japanese Yen from a technical perspective. On the daily chart below, GBP/USD has continued making downside progress in the aftermath of a bearish Head & Shoulders chart formation. Now, recent losses have brought the exchange rate to the 78.6% Fibonacci retracement level of 1.209.
There is a positive RSI divergence, which shows that downside momentum is fading. That can at times precede a turn lower. But, the 20- and 50-day moving averages remain sloping lower. These may hold as resistance, maintaining the broader downside focus. Further losses place the focus on the March low of 1.1804.
GBP/USD – Daily Chart
The Japanese Yen has been slightly more resilient to the British Pound compared to the US Dollar. GBP/JPY remains idling above the 180.84 support point that has been holding up since September. But, a Bearish Death Cross recently formed between the 20- and 50-day moving averages. This could spell further trouble for the exchange rate.
A breakout lower offers a stronger bearish technical bias, exposing the 23.6% Fibonacci retracement level at 179.35. Below that is the 38.2% point of 174.77. Meanwhile, immediate resistance are the near-term moving averages. Breaking above would offer a neutral bias, placing the focus on the August peak of 186.76.
| Change in | Longs | Shorts | OI |
| Daily | 8% | -3% | -1% |
| Weekly | -27% | 9% | -3% |
GBP/JPY – Daily Chart
--- Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
