The Pound Approaches Recent Highs: What Could Happen Next?

FXOpen -

GBP/USD

After a sharp rise at the end of August, the British currency corrected to a key support level around 1.3100. At the start of the week, sterling sellers attempted to push through this support, but so far without success. A false breakout of the 1.3100 level, followed by a rebound, allowed buyers to form a bullish engulfing pattern.

If the 1.3100 level holds, the GBP/USD  pair may consolidate around the recent highs in the 1.3240-1.3200 range. A deeper downward correction could occur if the pair breaks below 1.3100. In the coming trading sessions, we might see a surge in volatility as several important macroeconomic reports are expected:

  • Today at 11:30 (GMT +3:00) – UK Construction PMI for August;
  • Today at 15:15 (GMT +3:00) – US ADP Nonfarm Employment Change;
  • Today at 16:45 (GMT +3:00) – US Services PMI.

EUR/GBP

The technical analysis of EUR/GBP points to the possibility of a corrective pullback after a sharp decline over the past two weeks. The price has twice tested key support around 0.8400. It’s worth noting that the pair hasn’t traded below the 0.8400-0.8380 range in over two years, and it’s likely that at these levels we could see either a rebound or a significant slowdown in the downward trend.

Potential scenarios for EUR/GBP in the coming days:

  • If a corrective pullback begins, the target for buyers will be the 0.8500-0.8480 range;
  • A break below the 0.8380 support could lead to the resumption of a new bearish impulse.

Factors that could influence the pair's price include:

  • Today at 11:35 (GMT +3:00) – Speech by ECB Supervisory Board Member Anneli Tuominen;
  • Today at 12:00 (GMT +3:00) – Eurozone Retail Sales data;
  • Tomorrow at 12:00 (GMT +3:00) – Eurozone GDP for Q2.