**British Pound Technical Forecast: GBP/USD and GBP/JPY**
*Based on the analysis by Manish Jaradi, originally published on FOREX.com*
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The British Pound (GBP) has experienced significant market movements recently, prompting close attention from forex traders. In particular, the performance of GBP/USD (Sterling against the US Dollar) and GBP/JPY (Sterling against the Japanese Yen) has been at the center of market focus. This in-depth analysis explores the key technical developments for these two major currency pairs, explores the catalysts driving their price action, forecasts potential scenarios, and highlights critical support and resistance levels that traders should keep an eye on.
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**Overview: Key Themes in Recent Sterling Moves**
Sterling has displayed resilience in 2024, especially against the US Dollar and the Japanese Yen. Fluctuations in interest rate expectations, differences in economic growth outlooks, and broader risk sentiment shifts have collectively shaped GBP’s performance.
– The Bank of England (BoE) has maintained a cautious stance on monetary policy, more hawkish compared to the Federal Reserve and the Bank of Japan, particularly as inflation lingers above target.
– Recent UK economic data has been mixed, with persistent inflation and signs of economic stagnation, influencing central bank decisions and market sentiment.
– Risk appetite has oscillated in global markets in response to geopolitical tensions and shifting outlooks on US and UK monetary policies.
– GBP/JPY has surged this year as the yen continues to depreciate, fueled by the BoJ’s commitment to ultra-loose monetary policy.
– The GBP/USD exchange rate faces headwinds from a strong US Dollar, underpinned by resilient US economic data and hawkish signals from the Federal Reserve.
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**GBP/USD Technical Analysis**
The GBP/USD pair has been confined within a generally sideways, yet volatile, trend over recent months. Following an attempt at breaking higher earlier in the year, the pair has failed to establish sustained bullish momentum above key resistance zones. Several technical signals suggest that GBP/USD might remain vulnerable in the short to medium term.
*Key Technical Highlights:*
– **Resistance Levels:**
– The 1.2815 region has acted as firm resistance since the start of 2024. Attempts to breach this level have met with significant selling pressure.
– The longer-term supply zone extends toward the 1.3000 psychological area, with 1.2850-1.2900 also serving as interim resistance.
– **Support Zones:**
– Initial support sits at the 200-day moving average (around 1.2590-1.2620). Beneath this, the 1.2500 handle, followed by 1.2440, provides potential cushions for any decline.
– Further south, the 1.2300 region, a prior swing low, marks a key line in the sand for bullish hopes.
– **Moving Averages:**
– The 20-day and 50-day moving averages are flattening, reflecting the lack of clear direction in recent weeks.
– Price action remains choppy between these averages, suggesting indecision among traders.
– **Trendlines and Patterns:**
– An ascending trendline from October 2023 lows, connecting successive higher bottoms, remains unbroken and supports the bullish argument so long as GBP/USD holds above 1.2440.
– The pair oscillates within a broad consolidation channel between 1.2440 and 1.2815.
– **Momentum Indicators:**
– The Relative Strength Index (RSI) hovers near the neutral 50 mark, neither overbought nor oversold, consistent with the range-bound price action.
– MACD is similarly flat, signaling lack of momentum in either direction.
*Potential Scenarios:*
– **Bullish Case:**
If GBP/USD sustains a break above 1.2815 and closes above 1.2850, this could unlock upside
Read more on GBP/USD trading.