British Pound Forecast: GBP/USD Tumbles in Worst Week Since 2009
GBP/USD, EUR/GBP, GBP/JPY, GBP/CAD - Technical Forecast
- GBP/USD experienced the worst week since 2009, extending breakout
- EUR/GBP revisits October high as it aims to reverse prior downtrend
- GBP/JPY downside momentum fading as GBP/CAD eyes key support
British Pound Technical Outlook
After some hesitation, the British Pound appears to have confirmed a breakout under key rising support from August. On the chart below is my majors-based GBP index, which averages it against EUR, JPY, AUD and USD. From a purely technical standpoint, that could spell a change of pace for Sterling as it risks reversing the former uptrend from August until February. With the fundamental backdrop of the coronavirus outbreak fluid, higher-than-normal levels of volatility are to be expected and ought to be taken into account.
Majors-Based British Pound Index
GBP/USD Technical Outlook
GBP/USD just experienced its largest decline over the course of 5 trading days since January 2009, tumbling in excess of 5.6%. The pair has confirmed a breakout under a rising support range from September – pink lines on the chart below. That has exposed the October low at 1.2195 which may ease selling pressure in the week ahead. If taken out, that sets up GBP/USD for a retest of last year’s low as it aims for the cheapest levels since 1985. Getting to the latter entails closing under 1.1950. In the event of a turn higher, a daily close above 1.2582 may pave the way for a revisit to the former support range between 1.2726 to 1.2769.
GBP/USD Daily Chart
EUR/GBP Technical Outlook
EUR/GBP extended its breakout after clearing falling resistance from December back in February – as expected. That has now brought the pair to retest highs from October which makes for a range of resistance between 0.8987 to 0.9019. Guiding EUR/GBP higher is a rising trend line from the end of last month – red line below. If the climb resumes in the week ahead and highs from October are taken out, that exposes 0.9148 as the pair attempts to reverse the dominant downtrend that took place towards the latter half of 2019.
Forupdates on the British Pound this week, including on the election, follow me on twitter here@ddubrovskyFX.
EUR/GBP Daily Chart
GBP/JPY continued its descent this past week after prices cleared the key support range towards the end of February (140.83 to 141.16). Against the Japanese Yen, the British Pound trades in a fairly narrow descending channel going back to last month – red lines below. Positive RSI divergence warns that downside momentum is fading and the ceiling of the channel may be pressured ahead. Taking out 135.60 may open the door to revisiting former support from October which may come into play as resistance at 138.87. Otherwise, prolonging the descent may open the door to revisiting the August low.
GBP/JPY Daily Chart
GBP/CAD still has more room to go to the downside before a breakout can be confirmed. Keep a close eye on “inner support” on the chart below. If this rising support range is taken out, that could pave the way for declines to prolong. That may send the British Pound lower against the Canadian Dollar towards key support at 1.6920 to 1.6981. Down the road, “outer support” may keep GBP/CAD at bay. In the event of a turn higher, the 23.6% Fibonacci retracement could come into play as resistance at 1.7539.
GBP/CAD Daily Chart
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
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