GBP to USD Eyes a Return to $1.2050 Ahead of BoE Governor Bailey

It is a busier day for the GBP/USD. The Bank of England consumer credit report for October will draw interest. The areas of interest will include net lending to individuals, mortgage lending, mortgage approvals, and M4 money supply.

While the stats tend to have a limited impact on the Pound, a sharp increase could draw market interest. Economists forecast consumer credit to increase from £0.745 billion to £0.900 billion in October.

However, while the stats will draw interest, Bank of England commentary could have more influence on the Pound.

Later today, Monetary Policy Committee member Catherine Mann will speak as a panelist at The Conference Board’s Navigating the Economic Storm, ‘Policy solutions: fiscal and monetary (1235 pm GMT).

However, Bank of England Governor Andrew Bailey will draw more interest, with Bailey speaking at the Lords Economic Affairs Committee, State of the Nation (3 pm). The Economic Affairs Committee is a House of Lords permanent investigative committee charged with considering economic affairs,

GBP/USD Price Action

At the time of writing, the Pound was up 0.47% to $1.20160. A bullish start to the day saw the GBP/USD rise from an early low of $1.19483 to a high of $1.20222. Risk-on sentiment delivered early support.

Technical Indicators

The Pound needs to avoid the $1.2006 pivot to target the First Major Resistance Level (R1) at $1.2072 and the Monday high of $1.21179. Risk-on sentiment and hawkish MPC member chatter would support a bullish session.

In the case of an extended rally, the GBP/USD would likely take a run at $1.21 but fall short of the Second Major Resistance Level (R2) at $1.2184. The Third Major Resistance Level (R3) sits at $1.2361.

A fall through the pivot would bring the First Major Support Level (S1) at $1.1894 in play. However, barring an extended risk-off-fueled pullback, the GBP/USD should avoid sub-$1.18. The Second Major Support Level (S2) at $1.1828 should limit the downside.

The Third Major Support Level (S3) sits at $1.1651.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The GBP/USD sits above the 50-day EMA, currently at $1.19561. The 50-day EMA moved away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($1.19561) would support a move through R1 ($1.2072) to target $1.21. However, a fall through the 50-day EMA ($1.19561) would likely see the Pound slide through S1 ($1.1894) to bring S2 ($1.1828) and the 100-day EMA ($1.18265) into view.

The US Session

It is a relatively busy day ahead, with housing sector data and consumer confidence in the spotlight. While the housing sector numbers will draw interest, the consumer confidence figures will likely have more influence on the dollar. A slide to sub-100 could test support for riskier assets.

FOMC member chatter will also need consideration through the US session.