Sterling Weekly Price Outlook: British Pound Rejected At Resistance

In this series, we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. The British Pound is down nearly 2% from the late-February highs against the US Dollar with Sterling on pace to post a fifth consecutive daily decline today in New York. The losses come on the back of last week’s reversal from technical resistance and leaves the Pound vulnerable to further losses near-term. These are the updated targets and invalidation levels that matter on the GBP/USD weekly chart.

GBP/USD WEEKLY PRICE CHART

(Click on image to enlarge)

GBP/USD Price Chart - British Pound vs US Dollar Weekly

Notes: In last month’s GBP/USD Weekly Technical Outlook we noted that Sterling was approaching a “critical support confluence at 1.2738/54 – a region defined by the 2019 open & the 61.8% retracement of the yearly range and converges on the 25%-line of the ascending pitchfork formation extending off the August / January lows. IF price is going to make a near-term recovery, this would be a good spot to watch.”We added that a breach above resistance at 1.3205 was, “needed to mark resumption of the January breakout. Such a scenario would have us targeting subsequent resistance objectives at the December 2017 low at 1.33.”

Price registered a low at 1.2773 before reversing sharply with the advance failing last week after probing through confluence resistance at the 1.33-handle. Note that weekly momentum divergence into the most recent high highlights the risk for a move lower here within the broader uptrend. Look for initial support along the median-line, currently ~1.3050s backed by the 25% line around ~1.2830s – an area of interest of possible exhaustion / long-entries IF reached.

Key support & broader bullish invalidation rests at 1.2754/89. A topside breach / close above 1.33 is needed to mark resumption targeting the 2017 high-week close at 1.3494 and the key resistance at the upper parallel / 61.8% retracement / 2016 high-week close at 1.3638/75.

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