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GBP/USD Technical Outlook: Sterling Nearing Big Breakout Level vs Dollar

GBP/USD Technical Outlook: Sterling Nearing Big Breakout Level vs Dollar

Paul Robinson, Strategist

GBP/USD Highlights:

  • GBP/USD trading towards the wall at 13500
  • A breakout could send it much higher
  • EU/UK talks swaying price action, could determine make or break
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GBP/USD is on the move higher again after a see-saw type of trading week due to swaying sentiment surrounding the EU/UK trade talks. This of course could play a major part in how the big 13500-area is treated as it quickly approaches.

From a technical standpoint it is one of the bigger levels out there in FX-land, with the origins of resistance dating back to the GFC low in 2009. Since then the level has acted as a ceiling in December 2019 and August of this year.

In relative confluence, although due to time this isn’t so much the case anymore, lies the trend-line from the 2007 high. Regardless of whether it is in exact confluence or not, it is an important threshold that on a intra-week basis has been crossed. The key will be whether it can close above it to count as a break.

That will be one positive, but to really get cable trading higher we need to see a closing weekly candle above 13514. A close above major horizontal resistance and the long-term trend-line could clear a path for much higher prices.

The next significant area to worry about in that case might not arrive until the 2018 highs in the vicinity of 142/4400. However, resistance is resistance until it’s not, and that means we could still see another turn lower. An outcome towards lower levels appears likely to be less decisive than a breakout would be.

The bottom line is that GBP/USD is trading near a big level that could have a significant hand in how we shape our trading bias for the foreseeable future. Brexit talks appear to be nearing their end so we may have that resolution very soon.

GBP/USD Weekly Chart (13500/2007 trend-line)

gbp/usd weekly chart

GBP/USD Chart by TradingView

GBP/USD Daily Chart (breakout this time?)

gbp/usd daily chart

GBP/USD Chart by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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

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