GBPUSD Forecast: Key Levels for the Week Head

Key Events for the Week Ahead

Flash Manufacturing and Services PMIs
US Advance GDP and Durable Goods Orders
Fed’s preferred inflation gauge (PCE)

GBPUSD Forecast: DXY – Daily Time Frame – Log Scale

Source: Tradingview

From a momentum perspective, the DXY has rebounded from oversold levels following expectations of a rate cut. This rebound aligns with the 50% Fibonacci retracement of the yearly uptrend.

• Positive Rebound: Expected towards the trendline connecting the March and June 2024 lows. A close above 105.20 is needed to confirm a bullish continuation.

• Potential Drops: If the DXY falls below 103.65, it may align with the 0.618 and 0.786 Fibonacci retracements, near 103 and 102, respectively

• Key Event: Core PCE (Fed’s favored inflation gauge) reading. A drop below the recent 0.1% could amplify bearish sentiment, aligning with levels seen in 2020.

GBPUSD Forecast: GBPUSD – Monthly Time Frame – Log Scale

Source: Tradingview

Reaching the highlighted 1.3030 resistance zone, the GBPUSD’s uptrend managed to extend a wick towards the 1.3044 high, but closed at 1.30 before pulling back to the 1.29 zone.

The significance of the latest high aligns with a strong resistance level connecting the decreasing highs of 2014 and 2021, which also represents the upper border of a declining diagonal/ contracting down-trend, between 2008 and 2024.

A close above the 1.33 level is needed to confirm the bullish breakout out of the primary downtrend.

GBPUSD Forecast: GBPUSD – Daily Time Frame – Log Scale

Source: Tradingview

Along with the potential double top on the RSI indicator from the overbought zone, the chart reversed with a bearish engulfing pattern, and is headed towards the potential support zones:

Short term support: 1.2860 – 1.2840 zone

Longer term support: 1.2770 – 1.2760

A reversal back above the resistance line connecting the highs of December 2023 and March 2024, and more specifically a close above the 1.3030 can reverse the current bearish momentum with the following potential resistance levels in sight

Short term resistance zone: 1.3150

Longer term resistance zone: 1.3380 – 1.3790 – 1.42

--- Written by Razan Hilal, CMT

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