GBP/USD : Breakout Underway

(Fri, 11 Feb 2021). The British Pound is poised to mark a fifth consecutive weekly advance with GBP/USD rallying more than 3% off the January lows. A breakout above key technical resistance suggests further upside in the days ahead as Sterling rallies to multi-year highs. These are the updated targets and invalidation levels that matter on the GBP/USD weekly technical chart.

STERLING PRICE CHART - GBP/USD WEEKLY

Notes: In my last Sterling Weekly Price Outlook we noted that GBP/USD had, “stalled at confluence trend resistance into the start of the year…It’s important to note the technical significance of this resistance threshold – expect substantial acceleration in the event of a topside breach here.” Sterling held this resistance zone for more than six-weeks with a breakout yesterday fueling a rally of more than 0.8% this week.

The breakout keeps the focus higher in price with initial resistance objectives eyed 1.3955/97 – a region defined by the 61.8% Fibonacci extension of the March advance and the 2018 high-week reversal close. Look for a larger reaction there IF reached for guidance with a breach exposing the 1.43-handle. Initial support now at 1.3743 backed closely by the 1.3675. Ultimately, a break / close below the objective yearly open at 1.3646 is needed to shift the focus lower again in Sterling.

Bottom Line: A Sterling breakout is underway after breaching above critical confluence resistance and keeps the GBP/USD outlook weighted to the topside near-term. From a trading standpoint, look for downside exhaustion ahead of 1.3675 on pullbacks IF price is indeed heading higher with initial resistance objectives eyed above the 1.39-handle. I’ll publish an updated Sterling Price Outlook once we get further clarity on the near-term GBP/USD technical trade levels.

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