GBP/USD Outlook: Intraday Advance Sets Up Bullish Flag with Potential Target at 1.4100

Summary:

The GBP/USD could hit a new target of 1.4100 is the bullish flag plays out as expected, as seen on the pair's daily chart.

The GBP/USD has consolidated on its advance on the day, as disappointing US consumer confidence data hold back the greenback. The Consumer Sentiment index reported by the University of Michigan declines to near 10-year lows, hitting 70.2 after registering at 81.2 in July. The markets had expected no change in the sentiment index’s numbers.

Despite the setback, the GBP/USD looks set to end the week lower after the sterling was pressured somewhat steeply by poor data all week long.

The pair is up 0.32% on the day but down 0.11% this week as of writing.

Technical Outlook for GBP/USD

The pair looks set to end the week lower, but this could change if the price breaks the upper edge of the consolidation area, thus completing the bullish flag pattern. This could usher in a measured move towards the 1.4100 psychological resistance, which served as the neckline for the completed rounding top of May-July 2021. This move would have to traverse 1.3948, 1.4005 and 1.4060 to attain completion.

Conversely, a break of the 1.38126 support line and the flag’s lower border ushers in 1.3746 as new support. Below this level, 1.36771 and 1.36117 could face challenges if the decline is extensive.