GBP/USD Head & Shoulders in Play, GBP/JPY Holding at Support

British Pound, GBP/USD, GBP/JPY – Technical Update:

The British Pound may extend lower in the coming trading sessions. That is because GBP/USD confirmed a breakout under a bearish Head & Shoulders chart formation over the past few days. Now, the next obstacle to the downside is the 200-day Moving Average, which is immediate support. This has been maintaining the dominant upside bias.

Breaking under could open the door to a broader bearish reversal towards the May low of 1.2308. From there, confirming lower exposes the March low of 1.1804. Otherwise, a bounce off the moving average places the focus on the neckline around 1.2592. Clearing higher would place the focus back to the upside.

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Meanwhile, the British Pound is also appearing toppy against the Japanese Yen. Prices are consolidating just above the 184.013 inflection point from June. This follows persistent negative RSI divergence, showing that upside momentum is fading. Now, the 50-day Moving Average is in focus as key support. This has been maintaining the broader upside technical bias.

Breaking lower would expose the July low of 176.33, opening the door to a broader reversal. That would expose the 38.2% Fibonacci retracement level of 173.06. In the event of a turn higher from here, the focus will instead be placed on the current 2023 high of 186.76. Pushing beyond that exposes the November 2015 peak of 188.81.

Chart Created in TradingView

— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com