Pound bear trend extends – GBPUSD forecast

  • The negative theme for the Pound Sterling that we highlighted here last week has fully resumed this week.
  • With regards to the GBPUSD forex rate, the weakness has more notably been driven by a stronger US Dollar, with a “risk off” theme developing again.
  • This “risk off” theme has resumed as global stock indices have plunged lower this week, seeing the greenback benefit and gain ground across most major currencies as a safe haven currency.
  • However, the Pound is also vulnerable still due to:
    • Ongoing progress with the UK Internal Markets Bill
    • The fragile UK trade negations with the EU
    • Rising UK COVID-19 cases and new lockdown measures
    • A dovish Bank of England, contemplating negative interest rates
  • Here we now look at GBPUSD technical analysis and the downside risks for today, late September and into October.

GBPUSD day trade outlook: Bearish trend extends

A Tuesday failure from just below our flagged resistance at 1.2871, from 1.2867, to then extend the September bear move through 1.2762 to 1.2710, to reinforce Monday’s significant sell-off on through various supports and to resume the bear trend and forces from the earlier September plunge through numerous supports (including key 1.2981, to shift the intermediate-term outlook to bearish), to keep the risk to the downside Wednesday. 

Day trade setup

We see a downside bias through 1.2710 for 1.2644; a break here maybe aims for 1.2577.

But above 1.2780/83 aims for 1.2867/71 and possibly opens risk up to 1.2967.

GBPUSD intermediate-term outlook

The early September push below 1.2981 signalled an intermediate-term shift to a bear trend.

Downside risks: We see an intermediate-term bear trend to aim for 1.2644, 12480 and maybe 1.2251.

What changes this? Above 1.3239 shifts the intermediate-term bear trend to neutral; through 1.3359 to an intermediate-term bull trend.

6 Hour GBPUSD Chart
6 Hour GBPUSD Chart

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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