British Pound Forecast: GBP/USD Slams 1.15- Bears Near a Bigger Break?
British Pound Technical Price Outlook: GBP/USD Weekly Trade Levels
- Sterling technical trade level update – Weekly Chart
- GBP/USD plunge testing downtrend support- risk for a major price inflection
- Weekly resistance 1.1414/80 (key), ~1.1290s, 1.11 – Support 1.1414/80 (key), ~1.1290s, 1.11
The British Pound plummeted more than 2.2% off the monthly highsagainst the US Dollar with GBP/USD once again threatening a plunge into support at the yearly lows. The focus remains on possible price inflection into this key pivot zone with all eyes now shifting to major central bank rate decisions next week from the Fed and BoE. These are the updated targets and invalidation levels that matter on the GBP/USD weekly chart heading into the September open. Review my latest Strategy Webinar for an in-depth breakdown of this Sterling technical setup and more.
British Pound Price Chart - GBP/USD Weekly
Notes: In last month’s British PoundWeekly Technical Forecast we noted that GBP/USD had, “broken to fresh yearly lows with the yearly downtrend intact heading into the September open. From at trading standpoint, rallies should be capped by the1.1950 IF price is heading lower on this stretch with 1.1414/80 representing the next major support zone of interest.” Sterling registered an intraday low at 1.1405 the following week before rebounding nearly 3% off the lows. The pound is under pressure again this week with price once again approaching this key support pivot at the 2020 / 1984 lows at 1.1414/80- looking for possible price inflection off this zone in the days ahead.
A break / close below this threshold would risk substantial Sterling losses with such a scenario exposing the highlighted trendline confluence (currently near ~1.1290s) and the 1.11-handle. Initial weekly resistance steady at the 2020 close low at 1.1650 with broader bearish invalidation now lowered to the 2016 low / yearly channel resistance around 1.1950.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom Line: A short-lived rebound off key support takes the British Pound back into a major technical confluence zone- risk for price inflection into this threshold. From at trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards 1.1414/80- rallies should be capped by the monthly high-close at 1.1678 IF price is indeed heading lower on this stretch. Keep in mind the FOMC and Bank of England (BoE) interest rate decisions is on tap next week- stay nimble here. I’ll publish an updated Sterling short-term trade outlook once we get further clarity on the near-term GBP/USD technical trade levels.
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 +3.45 (77.53% of traders are long) – typically bearish reading
- Long positions are 2.41% lower than yesterday and 6.14% lower from last week
- Short positions are 13.05% higher than yesterday and 10.25% lower 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 less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed GBP/USD trading bias from a sentiment standpoint.
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--- Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.