Takeaway

The presenter, Michael Boutros of StoneX, argues that the British Pound is at a critical decision point against the US Dollar. The pair is holding key long-term support around 1.3474 ahead of this week's UK CPI, Fed, and BoE rate decisions. The speaker's focus is on a breakout from the weekly opening range for directional guidance, noting that a break below the 1.3400 handle would jeopardize the multi-month uptrend.

What the presenter said

• GBP faces major event risk from UK CPI, the Fed, and the Bank of England this week. [00:12]
• The pair is holding at a key support level, the objective yearly open at 1.3474, for the third consecutive week after turning from major resistance (1.3648-1.3685) last month. [00:26, 00:46]
• The key support zone is defined as 1.3465-1.3474, while initial resistance is the objective weekly open at 1.3527 and the July high at 1.3558. [01:27, 01:37]
• A breach above resistance at 1.3558 would suggest a more significant low is in place, targeting the 1.3591-1.3594 zone next. [02:12, 02:28]
• Conversely, a break below the support zone and the 200-day moving average (around 1.3453) would suggest a larger setback towards the 50% retracement at 1.3408. [02:47]
• The presenter notes that markets are pricing a 93% probability of a Fed hike this week and an 80% chance of another 25 bps by year-end, which is supporting the US Dollar. [04:18]
• For the multi-month Sterling uptrend to remain intact, the speaker believes losses must be limited to the 1.3400 level. [05:30]

Trade ideas

• Instrument: British Pound / US Dollar
• Direction: Neutral
• Thesis: The speaker advises focusing on a breakout of the weekly opening range for directional guidance, given the significant upcoming event risks.
• Conviction: Medium
• Entry/Target/Stop: None stated.
• Time Horizon: Short-term

Levels and data cited

Price Levels (GBP/USD): * Resistance: 1.3648-1.3685 (2025/2026 high week closes), 1.3591-1.3594 (61.8% retracement), 1.3558 (Objective July high), 1.3527 (Objective weekly open) * Support: 1.3474 (Objective yearly open), 1.3465-1.3474 (Key daily support), 1.3453 (200-day MA), 1.3400 (Key psychological level) * Targets (on a break lower): 1.3408 (50% retracement), 1.3345 (61.8% retracement)

Data Cited: * Fed: Markets priced at a 93% chance of a hike at the September meeting and an 80% chance of an additional 25bps by December. * BoE: Expected to hold rates at 3.75%. * UK CPI (Aug): Expected to rise to 3.1% (headline) and 2.7% (core). * UK Unemployment (3M Jul): 4.9% (a five-year high). * UK Claimant Count (Aug): 27.8K.

Risks and what would invalidate this

• The presenter states that losses below the 1.3400 level for Sterling would invalidate the multi-month uptrend.
• A break of this level could open up the potential for a larger trend reversal towards the 1.3345 target.