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British Pound Analysis: GBP/USD, EUR/GBP. GBP/JPY in Focus After Sterling’s Jump

British Pound Analysis: GBP/USD, EUR/GBP. GBP/JPY in Focus After Sterling’s Jump

Daniel Dubrovsky, Strategist

British Pound, GBP/USD, EUR/GBP, GBP/JPY – Technical Outlook

  • The British Pound gained aggressively, but key technical levels did hold
  • GBP/USD is eyeing the February peak before targeting highs from 2018
  • EUR/GBP facing support, GBP/JPY may also end up targeting 2018 high

The British Pound closed at its highest against the US Dollar since late February as GBP/USD shot past the key 1.4006 resistance level. The pair may be reading to extend the dominant uptrend since last year’s bottom, but there remain key technical obstacles ahead. Prices still need to take out the February 24th high, but immediately above that is the 1.4278 – 1.4377 resistance zone.

The latter is composed of highs from 2018. As such, this zone could come into focus as key resistance and turn prices lower. The 100-day Simple Moving Average may reinstate the dominant upside focus in the event of a deeper drop. Clearing the 1.3671 – 1.3779 support range would subsequently expose the 1.3447 inflection point. Otherwise, uptrend resumption has the midpoint of the Fibonacci extension at 1.4454 in focus.

GBP/USD Daily Chart

British Pound Analysis: GBP/USD, EUR/GBP. GBP/JPY in Focus After Sterling’s Jump

Chart Created in TradingView

The British Pound may be attempting to regain its footing against the Euro following recent consolidation. EUR/GBP once again rejected the 0.8731 – 0.8695 resistance zone, turning lower to close under the minor 14.6% Fibonacci extension at 0.8609. The close on May 10th was unable to convincingly take out the April 19th low. A further downside day could pave the way to revisit the April low.

In the event of a turn higher, the 100-day SMA could maintain the focus to the downside. Such an outcome may pave the way to test the 0.8540 inflection point before targeting 0.8472. Subsequently taking out the latter would expose lows from 2020, making for a zone of support between 0.8282 and 0.8339. Pushing above 0.8731 may open the door to revisiting the 0.8861 – 0.8881 inflection range.

EUR/GBP Daily Chart

British Pound Analysis: GBP/USD, EUR/GBP. GBP/JPY in Focus After Sterling’s Jump

Chart Created in TradingView

The British Pound close at its highest since April 2018 against the Japanese Yen. But, GBP/JPY wasn’t able to maintain a push above 153.85, which is the peak from that month. Persistent negative RSI divergence since February has been showing fading upside momentum. At times, this can precede a turn lower. That may place the focus on rising support from February – red parallel lines on the daily chart below.

Below that is the key 149.38 – 148.53 support zone before eyeing the 100-day SMA. The latter may reinstate the focus to the upside in the event of a material turn lower. Otherwise, pushing above 153.85 exposes the peak from 2018 at 156.61. Getting there entails closing above the 38.2% Fibonacci extension at 155.41.

GBP/JPY Daily Chart

British Pound Analysis: GBP/USD, EUR/GBP. GBP/JPY in Focus After Sterling’s Jump

Chart Created in TradingView

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

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