GBP to USD Forecasts: Bears to Target $1.2350 on Debt Ceiling Woes

It is a quiet day for the GBP/USD. There are no UK economic indicators for investors to consider today. The lack of economic indicators will leave the GBP/USD in the hands of market risk sentiment.

US debt ceiling-related news from Sunday will set the tone as investors look ahead to a busy week for the GBP/USD. UK private sector PMIs, the CPI Report, and retail sales figures will likely decide the outcome of the next Bank of England Monetary Policy Committee Meeting.

With no UK economic indicators to consider, investors should track BoE commentary with the media. There are no Monetary Policy Members on the calendar to speak today.

GBP to USD Price Action

This morning, the GBP/USD was up 0.19% to $1.24625. A mixed start to the day saw the GBP/USD fall to an early low of $1.24380 before rising to a high of $1.24721.

Technical Indicators

Resistance & Support Levels

The Pound needs to avoid the $1.2438 pivot to target the First Major Resistance Level (R1) at $1.2484. A return to $1.2450 would signal an extended breakout session. However, the Pound would need central bank chatter and US debt ceiling-related news 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 $1.2530. The Third Major Resistance Level sits at $1.2622.

A fall through the pivot would bring the First Major Support Level (S1) at $1.2393 into play. However, barring another risk-off-fueled sell-off, the GBP/USD should avoid sub-$1.2350 and the Second Major Support Level (S2) at $1.2346. The Third Major Support Level (S3) sits at $1.2254.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The GBP/USD sits above the 200-day EMA, currently at $1.24594. The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A hold above the 200-day EMA ($1.24594) would support a breakout from R1 ($1.2484) to target the 50-day ($1.24875) and 100-day ($1.24981) EMAs and R2 ($1.2530). However, failure to move through the 200-day EMA ($1.24594) would leave S1 ($1.2393) in view. A move through the 50-day EMA would send a bullish signal.

The US Session

Looking ahead to the US session, it is a quiet day on the US economic calendar. There are no US economic indicators for investors to consider. The lack of stats will leave the GBP/USD in the hands of US debt ceiling-related news and Fed chatter.

FOMC members Bullard, Bostic, and Barkin will follow Fed Chair Powell’s less hawkish forward guidance from Friday.

According to the CME Fed WatchTool, the probability of a June 25-basis point Fed interest rate hike stood at 17.4% on Friday. Fed Chair Powell weighed on bets of a June hike.

While Fed chatter will draw interest, US debt ceiling updates will likely have more impact on market risk sentiment.