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British Pound Price Forecast: GBP/USD Breaks Out to Fresh 2020 Highs

British Pound Price Forecast: GBP/USD Breaks Out to Fresh 2020 Highs

2020-08-29 20:00:00
James Stanley, Strategist
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British Pound, GBP, GBP/USD Price Forecast:

GBP/USD Breaks Out to Fresh 2020 Highs

In a world that appears largely unsettled represented by a currency market showing considerable noise in a variety of venues – GBP/USD has put in some fairly clean price action of recent. Today marks another key point as the pair has pushed up to a fresh 2020 high, continuing the trend that’s been in-force since March when 35-year-low was set.

Perhaps more pertinent to current events – GBP/USD has taken-out the 1.3200 level; the same price that set the high in March just before the deluge to 35-year-lows. That same level had come back into play in mid-August, helping to hold buyers at bay through multiple failed breakouts: But Friday of this week seemed to highlight some element of change as buyers were finally able to break on through to the other side.

GBP/USD Daily Price Chart

GBPUSD Daily Price

Chart prepared by James Stanley; GBPUSD on Tradingview

Getting a bit closer on the matter, and it was that support zone around the 1.3000 handle that was looked at earlier in August that helped to keep buyers in control. There were numerous tests at this zone in the first-half of the month, with bulls steadily showing a stronger pull as a higher low on Monday of this week led-in to that strong topside breakout.

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At this point, price action is in some rather new territory: The natural next question for a situation of this manner, tracking a fresh breakout is ‘what’s next?’

GBP/USD Four-Hour Price Chart

GBPUSD Four Hour

Chart prepared by James Stanley; GBPUSD on Tradingview

At this point, the bullish trend remains in order and given USD juxtaposition elsewhere, with EUR/USD showing timid price action below the 1.2000 handle – GBP/USD may remain as one of the more attractive vehicles for strategies around USD-weakness.

GBP/USD BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 1% 4% 3%
Weekly -5% 25% 9%
GBP/USD Retail Sentiment
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To that end, above current price action on GBP/USD is a potentially problematic area around the 1.3500 psychological level – the same price that helped to set the current two-year-high in December of last year.

GBP/USD Weekly Price Chart

GBPUSD Weekly Price Chart

Chart prepared by James Stanley; GBPUSD on Tradingview

GBP/USD Strategy for Next Week

For next week, GBP/USD can remain as one of the more attractive venues for themes of USD-weakness. The current breakout could be difficult to chase; but that prior zone of resistance could potential be re-utilized for follow-through support, with Cable bulls plotting for a pullback to find support around prior resistance.

There are two possible areas of consideration for such an approach. The first of which is focusing in on a couple of confluent Fibonacci levels at 1.3245 and another at 1.3275. The former of those levels is the 61.8% retracement of the 2018-2020 major move while the latter is the 88.6% marker of the 2019-2020 major move. A bit deeper, however, is another area of interest around that 1.3200 spot, which had helped to set the high in March and again in the middle of last week before buyers were finally able to post that breakout-move.

The technical forecast for GBP/USD will be set to bullish for the week ahead.

Technical Forecast for GBP/USD: Bullish

GBP/USD Four-Hour Price Chart

GBPUSD Four hour price chart

Chart prepared by James Stanley; GBPUSD on Tradingview

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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