GBP/USD Testing Five-Year Resistance: Breakout Ahead?

GBP/USD Price Chart, British Pound Forecast –TALKING POINTS

  • GBP/USD is on the edge of breaking five-year resistance
  • Break above with follow-through would mark tectonic shift
  • Does the multi-month perspective support upside potential?

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GBP/USD is on the cusp of breaking above descending five-year resistance as the British Pound soars almost six percent against the US Dollar in less than a week. The pair just recently broke through several upside barriers, rising to the highest level since early May as the EU and UK agreed on a Brexit deal.

GBP/USD – Daily Chart

GBP/USD chart created using TradingView

Buyers now face minor inflection point barriers at 1.2866 and 1.3015, but the next significant hurdle for upward GBP/USD progress looks to be at 1.3177. Reversing back below the 1.2751-84 congestion area is probably a bare-minimum prerequisite to neutralizing immediate upward pressure.

Looking at a weekly chart contextualizes the significance behind GBP/USD’s current positioning. If upside momentum remains strong and the pair breaks above descending resistance (red channel) with follow-through, it may mark a tectonic shift in the overall price trajectory. A breach could expose the pair to rise over nine percent until it hits the next layer of significant resistance at 1.4377.

GBP/USD – Weekly Chart

Chart showing GBP/USD

GBP/USD chart created using TradingView

Nevertheless, the way toward structural reversal is a long and difficult one. A dense block of back-to-back resistance levels will face prices soon after any upside break, warning that scope for long-term progress may be limited. All the same, GBP/USD may be establishing a base from which to reverse some of its losses over the past half-decade.

GBP/USD – Monthly Chart

Chart showing GBP/USD

GBP/USD chart created using TradingView

BRITISH POUND TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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