British Pound Technical Outlook: GBP/USD Surges off Support- BoE Levels
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Sterling Technical Price Outlook: GBP/USD Near-term Trade Levels
- Sterling technical trade level update – Daily & Intraday Charts
- GBP/USD attempting to snap three-week sell-off into downtrend support
- Support 1.3011 (key), 1.2833 - Resistance 1.3167, 1.3285/96 (key)
The British Pound rallied nearly 0.4% against the US Dollar with GBP/USD attempting to snap a three-week losing streak to fresh yearly lows. The rebound comes on the eve of tomorrow’s Bank of England interest rate decision with Sterling attempting mount a larger counter-offensive off downtrend support. These are the updated targets and invalidation levels that matter on the GBP/USD price charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling technical setup and more.
British Pound Price Chart – GBP/USD Daily
Technical Outlook: The British Pound plunged nearly 4% from the yearly open before rebounding yesterday off confluent support around the 1.618% Fibonacci extension of the decline yearly decline at 1.3011 (low registered at 1.30 proper). The sell-off may be a bit stretched down here the immediate focus on this recovery off downtrend support with the Bank of England rate decision expected to hike for the second time this year tomorrow.
British Pound Price Chart – GBP/USD 240min
Notes: A closer look at Sterling price action shows GBP/USD continuing to trade within the confines of a descending pitchfork formation extending off the January / February highs with the 25% parallel further highlighting this week’s turn off support at 1.3011. Initial resistance now back at 1.3167 backed by the 75% parallel (currently ~1.3240s) and 1.3285/96- a region defined by the 38.2% retracement of the yearly range and the 23.6% retracement of the broader 2021 decline. Rallies should be capped by this threshold IF Cable is indeed heading lower with a break of the weekly lows threatening a much steeper sell-off towards 1.2833 and the 100% extension of the 2020 decline at 1.2659.
Bottom line: The British Pound has rebounded off downtrend support ahead of the BoE tomorrow with the focus on a larger recovery towards downtrend resistance. From at trading standpoint, a good region to reduce short-exposure / lower protectives stops. Look for a reaction on a stretch towards 1.3285/96 for guidance here with a break / daily close below the 1.30-handle needed to fuel the next leg lower in price. Review my latest British Pound Weekly Price Outlook for a closer look at the longer-term GBP/USD technical trade levels.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
British Pound Trader Sentiment – GBP/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long GBP/USD - the ratio stands at +2.89 (74.28% of traders are long) – typically bearish reading
- Long positions are3.24% lower than yesterday and 7.18% higher from last week
- Short positions are14.50% lower than yesterday and 3.10% 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger GBP/USD-bearish contrarian trading bias from a sentiment standpoint.
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- Written by Michael Boutros, 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.