The British Pound is trading within a well-defined range, encountering resistance as traders await crucial interest rate decisions from the Federal Reserve and the Bank of England (BoE). This pivotal moment for GBP/USD coincides with the release of key inflation data, setting the stage for an imminent breakout from the current December opening range.

GBP/USD Technical Outlook

GBP/USD is approaching critical resistance levels while remaining below key thresholds on the weekly technical chart. The December opening range remains intact, highlighting a consolidation phase that traders are closely monitoring. The pair’s broader trend continues to lean bearish following last month’s breakdown, with significant resistance and support levels now dictating near-term price action.

Key Resistance Levels:

• 1.2731-1.2787: Defined by the 2024 yearly open, the 61.8% Fibonacci retracement, the February 2019 low, and the 52-week moving average.
• 1.2849: Marked by a 38.2% Fibonacci retracement of the September decline and a convergence with former slope support. A breach and close above this level would signal a potential trend reversal and invalidate the bearish outlook.

Key Support Levels:

• 1.2494-1.2542: This zone includes the 2024 low-week close and the 78.6% retracement, serving as the first line of defense for bulls.
• 1.2367-1.2397: Backed by the April low close, the 2023 January high-week close, and the May low-week close.
• 1.2237 and 1.2084-1.2113: Levels of interest for possible downside exhaustion or price inflection if the pair breaks lower.

Weekly Chart Insights

In November’s technical forecast, GBP/USD showed signs of vulnerability at its first major pivot zone, rallying 2.6% off the lows before encountering resistance near the yearly moving average. This resistance at 1.2783 remains critical, with a decisive move above 1.2849 required to shift the broader outlook to bullish. Conversely, a close below 1.2493 would confirm a continuation of the downward trend.

Macro Events Shaping GBP/USD

The week ahead is packed with high-impact events that could drive significant volatility in GBP/USD:

• UK Inflation Data: Due tomorrow, this will provide insights into price pressures and inform BoE’s policy stance.
• FOMC Decision: The Federal Reserve is expected to announce its final rate decision for 2024, with markets anticipating a 25-basis-point cut.
• BoE Decision: Scheduled later in the week, the BoE’s policy decision will also influence GBP/USD dynamics.

The outcome of these events could determine whether GBP/USD breaks above resistance or resumes its bearish trend. Traders are advised to stay nimble and monitor weekly closes for directional cues.

Bottom Line

GBP/USD is consolidating below significant resistance levels, with the immediate focus on a breakout of the December range. While the broader trend remains bearish, a sustained move above 1.2849 could signal a reversal. Conversely, a break below 1.2493 would pave the way for further declines toward 1.2237 and possibly lower.

With key economic data and central bank decisions on the horizon, the coming days are likely to provide clarity on the pair’s next major move. Traders should remain vigilant and prepared for heightened volatility in GBP/USD.