Sterling prices surged more than 6.6% against the US Dollar off the yearly lows with the British Pound breakout now stalling around the 1.30-handle early in the week. The immediate advance may be vulnerable here, but the broader focus remains constructive after last week’s breakout. These are the updated targets and invalidation levels that matter on the GBP/USD price charts. 

STERLING PRICE CHART - GBP/USD DAILY

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Chart Prepared by Michael Boutros, Technical Strategist; GBP/USD on Tradingview

Technical Outlook: In my latest British Pound PriceOutlook we noted that the, “we’ll favor fading weakness on while above 1.2389.” Sterling has rallied more than 5.8% off the monthly / yearly lows with the advance now testing soft resistance here at 1.2990. GBP/USD is poised to snap 5-days of consecutive gains today (and only the second down-day in nine) with the rally looking a bit vulnerable in early US trade.

Initial support rests at the confluence of the 61.8% retracement of the yearly range and the 100% extension of the advance off the yearly lows at 1.2818/38 with the yearly open just lower at 1.2754- look for a reaction off one of these levels IF reached. A topside breach keeps the focus on 1.3077 and the 1.32-handle .

STERLING PRICE CHART – GBP/USD 120MIN

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Notes: A closer look at Sterling price action shows GBP/USD trading within the confines of an ascending pitchfork formation extending off the September/October lows with price setting the weekly opening-range just below the upper parallel. Initial support rests at 1.2818/37 and 1.2754 with near-term bullish invalidation set to the 1.27-handle.

A topside breach of the weekly range highs keeps the focus on 1.3076 and the upper parallel – a close above this threshold would likely fuel accelerated gains in the Pound with such a scenario targeting 1.3204 and the high-day close at 1.3310.

Bottom line: Sterling is approaching near-term uptrend resistance and leaves the immediate advance vulnerable heading into the upper parallel. Look for possible exhaustion up here with a set-back to offer more favorable entries. From a trading standpoint, look to reduce long-exposure / raise protective stops on a move towards the upper parallel – we’ll favor fading weakness while within this formation ultimately targeting a breach towards 1.33. Review my latest Sterling Weekly Outlook for a closer look at the longer-term GBP/USD technical trading levels.

STERLING TRADER SENTIMENT - GBP/USD PRICE CHART

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• A summary of IG Client Sentiment shows traders are net-short GBP/USD - the ratio stands at -1.03 (49.22% of traders are long) – neutral reading
• Long positions are 11.91% higher than yesterday and 0.80% lower from last week
• Short positions are 1.13% lower than yesterday and 38.34% higher from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Traders are less net-short than yesterday but more net-short from last week and the combination of current positioning and recent changes gives us a further mixed GBP/USD trading bias from a sentiment standpoint.