British Pound, GBP, GBP/USD, GBP/JPY, EUR/GBP Talking Points:
- GBP/USD[1] put in a two-week streak-of-strength but ran into a wall of resistance earlier this week.
- While USD[2] may have a fairly chaotic backdrop around the election, there may be more compelling setups on either side of Sterling by looking towards GBP/JPY[3] and EUR/GBP[4].
- The analysis contained in article relies on price action[5] and chart formations[6]. To learn more about price action or chart patterns, check out our DailyFX Education[7] section.
While the headlines have been far from joyful reading in the UK of recent, one might not know better if looking at the GBP[8]/USD chart coming into this week. The British Pound looked downright strong after testing a big spot of support in late-September, and this led to a two-week-rally that held through this week’s open.
I had looked at that support zone in late-September[9], with GBP/USD gearing up for yet another test of the 1.3000 psychological level[10]. That test has so far failed as prices have pulled back, attempting to cauterize yet another area of higher-low support. Helping to hold the lows over the past two days is a key area of support just below the 1.2900 handle, as 1.2896 is the 50% marker of the 2018-2020 major move in the pair. Also of relevance are the 76.4 and 78.6% Fibonacci retracements of the December-March major move, as these prices have now helped to hold multiple resistance inflections so far this week; and this comes after a fairly clear show of support in the same area in the first-half of August.
