GBP PRICE CHART TECHNICAL OUTLOOK
- Spot GBPUSD and spot EURGBP threaten to re-test key technical levels of confluence
- The British Pound could rise if the Sterling can catch bid again after dropping to multi-month lows against the US Dollar and Euro, but overarching GBP weakness remains a risk
- Download the free Q3 GBP Forecast from DailyFX for comprehensive technical and fundamental insight
The British Pound Sterling (GBP) continues to succumb to Brexit risks and political uncertainty surrounding the UK Prime Minister election. GBP weakness was once again reflected by another week of downside in spot GBPUSD and upside in spot EURGBP. Yet, the prospect of GBPUSD rising off year-to-date lows is still in play from a technical perspective with key support showing signs of helping keep the Sterling bid.
GBPUSD PRICE CHART: WEEKLY TIME FRAME (JULY 10, 2016 TO JULY 19, 2019)
Taking a look at spot GBPUSD from a broader perspective, we can see that the 1.2600 handle has previously served as a serious level of confluence. While increased selling pressure earlier in the month drove the Pound Sterling below this technical level, which appears to have broken the bullish trend line of its upward climb over the last three years, Fibonacci support near 1.2400 provided by the 76.4% retracement of the forex rate’s 2016 low should not be taken lightly. Also, the noticeably long wicks on the weekly candles might suggest demand for spot GBPUSD at this technical support zone which could imply that a bottom is near.
GBPUSD PRICE CHART: DAILY TIME FRAME (DECEMBER 07, 2018 TO JULY 19, 2019)
As such, a probable scenario may be for spot GBPUSD to remain rangebound between the 1.2400 and 1.2600 price levels over the next week as the currency pair consolidates before making its next big move. Find out how to use IG Client Sentiment to identify potential range trading opportunities.
Spot GBPUSD near-term selling pressure could be waning as suggested by the RSI “oversold” level of 30 being defended adamantly. That said, the British Pound’s overwhelming downtrend risks pushing spot prices even lower. A drop below the 1.2400 price level, if held, could put spot GBPUSD in ‘freefall mode’ and open up the door to 1.2000 – or even parity with the dollar as warned by Sir Richard Branson – if selling is sustained over the longer term. Looking to the upside, however, a push above 1.2600 could see spot GBUPUSD bulls potentially target the 38.2% Fib retracement near 1.2800.
EUR/GBP PRICE CHART: DAILY TIME FRAME (NOVEMBER 18, 2018 TO JULY 19, 2019)
Turning to spot EURGBP, the Pound Sterling is also coming off its weakest level against the Euro in 7-months since skyrocketing above the 0.9000 handle this past week. Although, a hard rejection at 0.9050 seems to solidify the price level as a noteworthy zone of technical resistance which threatens to keep spot EURGBP upside limited.
A retest of this area of confluence could serve constructive before providing spot EURGBP bears with enough conviction to begin reversing the recent uptrend. Although, with the Euro at risk ahead of the July ECB meeting, spot EURGBP bears could be provided with an opportunity to push below Fib support from the 76.4% retracement of the currency pair’s year-to-date trading range.
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