British Pound, GBP, GBP/USD, GBP/JPY, EUR/GBP Talking Points:
- GBP/USD put in a two-week streak-of-strength but ran into a wall of resistance earlier this week.
- While USD may have a fairly chaotic backdrop around the election, there may be more compelling setups on either side of Sterling by looking towards GBP/JPY and EUR/GBP.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
While the headlines have been far from joyful reading in the UK of recent, one might not know better if looking at the GBP/USD chart coming into this week. The British Pound looked downright strong after testing a big spot of support in late-September, and this led to a two-week-rally that held through this week’s open.
I had looked at that support zone in late-September, with GBP/USD gearing up for yet another test of the 1.3000 psychological level. That test has so far failed as prices have pulled back, attempting to cauterize yet another area of higher-low support. Helping to hold the lows over the past two days is a key area of support just below the 1.2900 handle, as 1.2896 is the 50% marker of the 2018-2020 major move in the pair. Also of relevance are the 76.4 and 78.6% Fibonacci retracements of the December-March major move, as these prices have now helped to hold multiple resistance inflections so far this week; and this comes after a fairly clear show of support in the same area in the first-half of August.