British Pound Forecast: GBP/USD Bounded by Fibonacci Support & Trendline Resistance
26 Oct 2023 17:20, GMTGBP/USD OUTLOOK:
- GBP/USD has been trending lower over the past three months or so
- After recent price action, cable appears compressed between trendline resistance and Fibonacci support
- This article presents important technical levels worth watching in the coming days
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The British pound has been losing ground against the U.S. dollar since mid-July, with GBP/USD following a well-defined downtrend line and establishing impeccable higher lows and lower lows along its bearish trajectory, as shown on the daily chart below.
Earlier in the week, cable made a push towards trendline resistance at 1.2275, but was swiftly rebuffed, reversing its course to the downside. This pullback suggests that sellers still have the upper hand in the market, as the greenback continues to ride a wave of bullish momentum in the broader FX space given elevated U.S. bond yields.
Following its recent setback, GBP/USD is sitting above a critical support area near 1.2075, where the 38.2% Fibonacci retracement of the 2022/2023 rally aligns with several swing lows. It is imperative that this floor holds at all costs - any failure to do so may catalyze a slump towards the 1.1800 handle.
In the event that prices bottom out and then start to rebound off current levels, dynamic resistance looms at 1.2225. Successfully piloting above this technical barrier could rekindle upward impetus, creating the right conditions for a move toward 1.2330. On further strength, the focus shifts to 1.2450, near the 200-day simple moving average.
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| Change in | Longs | Shorts | OI |
| Daily | -9% | 6% | 0% |
| Weekly | -31% | 36% | -2% |
GBP/USD TECHNICAL CHART
GBP/USD Chart Prepared Using TradingView
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