GBP to USD Forecasts: $1.25 in the Hands of US Jobs Data

It is a quiet Thursday session for the GBP/USD. There are no UK economic indicators to provide direction. The lack of economic indicators leaves the GBP/USD in the hands of market risk sentiment and the US economic calendar.

After a lengthy period of clarity, the Bank of England and the Federal Reserve’s monetary policy outlooks are less clear. While the markets are betting on a BoE move, there was a shift in sentiment toward the Fed’s June policy decision, fueled by a surprise Bank of Canada rate hike.

However, there are no UK economic indicators to draw interest or central bank speeches to move the dial, which could leave the GBP/USD pair in limbo ahead of the US session.

With no economic indicators or Monetary Policy Committee members on the calendar to speak today, investors should track chatter with the media.

GBP to USD Price Action

This morning, the GBP/USD was up 0.10% to $1.2450. A mixed start to the day saw the GBP/USD fall to an early low of $1.24295 before rising to a high of $1.24522.

Technical Indicators

Resistance & Support Levels

The Pound needs to avoid the $1.2444 pivot to target the First Major Resistance Level (R1) at $1.2493 and the Wednesday high of $1.24998. A move through the morning high of $1.24522 would signal an extended breakout session. However, the Pound would need market risk sentiment to support a breakout session.

In the event of an extended rally, the GBP/USD would likely test the Second Major Resistance Level (R2) at $1.2549 and resistance at $1.2550. The Third Major Resistance Level sits at $1.2654.

A fall through the pivot would bring the First Major Support Level (S1) at $1.2388 into play. However, barring a risk-off-fueled sell-off, the GBP/USD should avoid sub-$1.2350 and the Second Major Support Level (S2) at $1.2339. The Third Major Support Level (S3) sits at $1.2234.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bearish signals. The GBP/USD sat above the 100-day EMA, currently at $1.24368. The 50-day EMA closed in on the 200-day EMA, with the 100-day EMA converging on the 200-day EMA, delivering bearish signals.

A hold above the 50-day EMA ($1.24316) would support a breakout from R1 ($1.2493) to target R2 ($1.2549) and $1.2550. However, a fall through the 50-day EMA ($1.24316) would bring S1 ($1.2388) into view. A fall through the 50-day EMA would send a bearish signal.

The US Session

It is another quiet US session. US initial jobless claims will draw interest early in the session.

With hiring continuing to impress, a sharp increase in jobless claims would support a more dovish Fed pause in June. However, economists forecast jobless claims to increase from 232k to 235k.

While the economic calendar is light, no FOMC members are speaking today. The Fed entered the blackout period that ends on June 15.

According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike increased from 21.8% to 33.8% versus 26.4% one week earlier.