Skip to Content
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.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
GBP/USD Price Outlook: British Pound Probes Critical Support

GBP/USD Price Outlook: British Pound Probes Critical Support

Rich Dvorak, Analyst

Share:

What's on this page

BRITISH POUND WEEKLY TECHNICAL FORECAST – NEUTRAL

  • The British Pound weakened sharply against the US Dollar last week
  • GBP/USD dropped 244-pips and breached its 200-day moving average
  • Sterling bulls might defend critical support near the 1.36-price level
Advertisement

GBP/USD price action faced heavy selling pressure last week. Broad-based US Dollar strength exacerbated Sterling weakness and drove the cable nearly 250-pips lower on balance. The British Pound fell out of favor versus other key FX peers like the Euro and Yen as well. GBP/JPY sank over 240-pips while EUR/GBP jumped 82-pips. Sterling bulls were able to find solace in GBP/AUD and GBP/CAD, however, as commodity currencies hemorrhaged. This all seemed to track a noticeable deterioration in market sentiment and appetite for risk.

GBP/USD PRICE CHART: DAILY TIME FRAME (24 MARCH TO 20 AUGUST 2021)

GBPUSD Price Chart British Pound to US Dollar Technical Forecast

Chart by @RichDvorakFX created using TradingView

That said, lingering risk aversion, in addition to Fed taper speculation, threaten to keep GBP/USD price action bogged down. Not to mention, after breaching its 200-day simple moving average last week, the Pound-Dollar could continue struggling below this key technical barrier. GBP/USD might similarly face headwinds from the descending trendline. Also, as indicated by the MACD, bearish momentum seems to be accelerating.GBP/USD is starting to look a bit oversold, though, to be fair. This is suggested by the relative strength index.

GBP/USD Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 0% -4% -2%
Weekly -11% 12% -3%
What does it mean for price action?
Get My Guide

Potential for mean-reversion back higher is similarly hinted at by GBP/USD price action trading below its bottom Bollinger Band. On that note, the Pound-Dollar might find some buoyancy near current levels with technical support around the 1.3600-handle likely serving as a formidable layer of defense. This zone of confluent support is underpinned by the monthly lows notched in February and July as well as the 23.6% Fibonacci retracement level of the cable’s March 2020 to June 2021 trading range. Invalidating this support level exposes year-to-date lows near the 1.3450-price level.

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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

DISCLOSURES