Talking Points:
The British Pound[1] has rallied nearly 2% off the May lows with the advance now approaching initial topside resistance targets. The focus remains on a stretch into yearly open resistance with a breach there needed to suggest a more significant low is in place. Here are the GBP/USD levels that matter heading into the close of the week.
Technical Outlook: In this week’s British Pound Technical Perspective[2], we highlighted a structural support range in GBP/USD while noting that, “IF Sterling is going to bounce near-term, this would be a good spot.” The reversal off slope support has gathered pace mid-week with the pair testing slope resistance today in New York.
Key resistance stands just higher at 1.3464 & 1.3495-1.3504 – both areas of interest for possible near-term exhaustion / short-entries. Key support remains at 1.3182-1.3225 where the August high-close and the 50% retracement converge on the lower median-line parallel[3]. A break below this level would likely see accelerated losses with such a scenario targeting support objectives at 1.3036 backed by the 1.29-handle.
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Notes: A closer look at Sterling price action sees what could be a bear flag in the works off the May lows with initial resistance targets eyed at 1.3450 backed by 1.3495-1.3504. That said, given the technical considerations made earlier in the week on the US Dollar[6], we’ll respect a daily close above this threshold with such a scenario targeting the 2017 high close at
