Sterling Price Outlook: British Pound Breakout Stalls-GBP/USD Levels
What's on this page
- British Pound breakout stalls near October highs- setback to offer opportunity
- Check out our 2019 projections in our Free DailyFX GBP/USD Trading Forecasts
- Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT
Sterling is on the defensive this week with the British Pound down more-than 0.6% against the US Dollar ahead of tomorrow’s BoE rate decision. Price has continued to contract since the decline off the October highs and while the outlook remains broadly constructive, the risk remains for a deeper correction If this range resolves lower. These are the updated targets and invalidation levels that matter on the GBP/USD weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling price setup and more.
Sterling Price Chart - GBP/USD Weekly
Notes: In last month’s Sterling Weekly Price Outlook we noted that GBP/USD was, “testing BIG downtrend resistance here and the focus is on a breach of this key technical resistance confluence (1.2690).” Cable ripped higher the following week with price registering a high at 1.3013 into the close of October trade. The British Pound is down more-than 1.2% off these highs and while the broader outlook remains weighted to the topside, the threat remains for further losses near-term.
Yearly open support rests at 1.2754 with broader bullish invalidation now raised to the 2018 low-week close / September swing high at 1.2582- look for bigger reaction on a drop into this region IF reached. The next big topside resistance objectives remain at the 78.6% retracement of the yearly range at 1.3077 backed by 1.3168-1.3203.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: The Sterling breakout may be losing some steam here and while the outlook remains constructive, the near-term advance remains vulnerable here into the Bank of England (BoE) interest rate decision tomorrow. From a trading standpoint, look for downside exhaustion on a stretch lower – possible entries on a test of the yearly open or lower while above 1.2582.I’ll publish an updated Sterling Price Outlook once we get further clarity on the near-term GBP/USD technical trade levels.
Sterling Trader Sentiment - GBP/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long GBP/USD - the ratio stands at +1.10 (52.34% of traders are long) – weak bearish reading
- Long positions are0.44% higher than yesterday and 5.39% lower from last week
- Short positions are 3.20% lower than yesterday and 7.78% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Traders are more net-long than yesterday but less net-long from last week and the combination of current positioning and recent changes gives us a further mixed GBP/USD trading bias from a sentiment standpoint.
See how shifts in GBP/USD retail positioning are impacting trend- Learn more about sentiment!
Key UK / US Data Releases
Previous Weekly Technical Charts
- Gold (XAU/USD)
- Australian Dollar (AUD/USD)
- Canadian Dollar (USD/CAD)
- Euro (EUR/USD)
- Crude Oil (WTI)
- US Dollar (DXY)
- New Zealand Dollar (NZD/USD)
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.