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By: Editorial Team, StoneX Media
The British pound has spent four consecutive weeks at the bottom of its yearly range against the U.S. dollar, and the GBP/USD opening range for the month is tightening right on top of that support. The monthly open marks the first line of resistance for GBP/USD, so a close above it is the first sign of a broader sterling recovery, whereas a daily close below support points to a resumption of the downtrend. Easing U.S. Treasury yields and a softer dollar have handed the British pound some relief. As a result, range traders have well-defined levels on both sides of the trade, with U.S. inflation data sitting directly in the path.
Michael Boutros, StoneX Media Senior Market Analyst, brings more than 20 years of experience trading FX, commodities and equity indices across numerous trade desks. His technical work reads markets through a structured, disciplined lens across multiple time frames, with a medium-term, event-driven focus on currency pairs such as GBP/USD.
The British pound has run into the objective monthly open as initial resistance, and GBP/USD has tagged that level without breaking through. On the daily chart, the median line of the same pitchfork that captured sterling's earlier median line break has rejected the last three attempts higher. "You have a contractionary range within the monthly range taking shape right above key support,” Boutros explains, with the monthly open converging on that median line. Two layers of resistance now sit in one zone, so a break above the monthly open is the first evidence of a larger recovery in sterling. Beyond that, a breach of the May swing low and the 23.6% retracement of the August highs would be needed to shift the near-term focus higher.
Sterling's weekly momentum has refused to break down even with price parked at the bottom of the yearly range, and that divergence keeps the British pound's support zone intact. According to Boutros, "we haven't seen weekly RSI drop below that 40 barrier, and we've continued to defend it even after a fourth consecutive weekly test here" [01:29]. A daily close below yearly support, and ideally a weekly close, would mark a resumption of the broader GBP/USD downtrend and bring earlier swing lows back into view. Until then, the four-hour chart keeps printing lower highs and higher lows inside a range that has held since the start of the month. The longer that range holds, the more weight a breakout in either direction carries.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Michael Boutros, StoneX Media Senior Market Analyst
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The British pound is coiling inside a tightening monthly opening range right on top of yearly support against the U.S. dollar. The monthly open is the first barrier for any recovery, and weekly momentum is still holding the line below.
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