News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
British Pound Technical Forecast: Sterling Rally Fragile into Fed/BoE

British Pound Technical Forecast: Sterling Rally Fragile into Fed/BoE

Michael Boutros, Strategist

Sterling Technical Price Outlook: GBP/USD Weekly Trade Levels

  • Sterling technical trade level update – Weekly Chart
  • GBP/USD rebound keeps monthly opening-range in focus heading into Fed/BoE
  • Key resistance into the 1.43-handle – Support 1.3743, broader bullish invalidation 1.35
Advertisement

The British Pound snapped a two-week losing streak this week with Sterling paring nearly half of the 3.26% decline seen off the February highs. Despite the recent advance, the threat remains for a deeper correction in the days ahead as we look to major event risk on tap next week. These are the updated targets and invalidation levels that matter on the GBP/USD weekly technical chart heading into the FOMC / BoE interest rate decisions. Review my latest Strategy Webinar for an in-depth breakdown of this Cable trade setup and more.

Sterling Price Chart - GBP/USD Weekly

GBP/USD Chart

Chart Prepared by Michael Boutros, Technical Strategist; GBP/USD on Tradingview

Notes:In my last Sterling Weekly Price Outlook we noted that the GBP/USD, “breakout may be vulnerable in the weeks ahead after reversing sharply off technical uptrend resistance.” The British Pound fell more than 3% off those highs before rebounding this week off former slope resistance extending off the March 2020 highs. Note that a pending support trigger in weekly momentum remains in focus.

Initial literal support steady at 1.3675-1.3743 – look for inflection off this zone with a break / close below keeping the focus on confluence support at the May 2020 trendline / 2017 high-week close at 1.3494(area of interest for possible downside exhaustion IF reached). Initial resistance unchanged at 1.3997 (2018 high-week close) backed by the 2018 high-close / 50% retracement of the 2014 decline at 1.4236-1.4303- a breach / close above this threshold would be needed to mark resumption of the broader advance with such a scenario exposing 1.4377 and longer-term topside objectives into the 100% extension at 1.4745.

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 correction off the yearly highs may not yet be complete and heading into next week’s FOMC / BoE rate decisions, the focus remains on possible topside exhaustion ahead of the yearly high-day close at 1.4138 IF price is indeed heading lower. Ultimately, a deeper correction may offer more favorable opportunities with a breach / close above the 1.43-handle threatening a much larger Sterling advance.

Sterling Trader Sentiment - GBP/USD Price Chart

British Pound Technical Forecast: Sterling Rally Fragile into Fed/BoE
  • A summary of IG Client Sentiment shows traders are net-long GBP/USD - the ratio stands at +1.14 (53.33% of traders are long) – neutral reading
  • Long positions are7.33% lower than yesterday and 7.08% higher from last week
  • Short positions are4.13% lower than yesterday and 6.14% 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. Yet traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed GBP/USD trading bias sentiment standpoint.

---

Key UK / US Economic Data Releases

UK/US Economic Data

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- 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.

DISCLOSURES