GBP to USD Forecasts: Bulls Eye $1.25 on US GDP and Jobless Claims
It is a quiet day ahead for the GBP/USD. Early in the session, CBI distributive trade figures for January will be in the spotlight. The CBI Distributive Trade Survey provides a health check of the retail sector and is a leading indicator of retail sales.
Economists forecast a decline from 11 to -5 in January. In November, the indicator had stood at -19 versus 18 in October.
If last week’s retail sales figures for December are a guide, there could be a larger-than-forecasted decline in January, which would be price negative for the Pound. In December, retail sales slid by 1.0%, following a 0.5% decline in November.
While consumer spending is back in the spotlight, no Monetary Policy Committee Members are speaking today, leaving investors to monitor chatter with the media.
GBP/USD Price Action
At the time of writing, the Pound was up 0.15% to $1.24165. A mixed start to the day saw the GBP/USD fall to an early low of $1.23837 before rising to a high of $1.24182.
The Pound needs to avoid a fall through the $1.2361 pivot to target the First Major Resistance Level (R1) at $1.2440. A return to $1.2420 would signal an extended breakout session. However, the Pound would need US stats to be Pound-friendly to support a breakout session.
In the event of an extended rally, the GBP to USD would likely test the Second Major Resistance Level (R2) at $1.2483 and resistance at $1.25. The Third Major Resistance Level sits at $1.2605.
A fall through the pivot would bring the First Major Support Level (S1) at $1.2319 into play. However, barring a data-fueled sell-off, the GBP/USD should avoid sub-$1.2250 and the second Major Support Level (S2) at $1.2240.
The Third Major Support Level (S3) sits at $1.2118.
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 $1.23146. The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.
A hold above S1 ($1.2319) and the 50-day EMA ($1.23146) would support a breakout from R1 ($1.2440) to target R2 ($1.2483) and $1.25. However, a fall through S1 ($1.2319) and the 50-day EMA ($1.23146) would bring the 100-day EMA ($1.22509) and S2 $1.2240 into view. A fall through the 50-day EMA would send a bearish signal.
The US Session
It is a busy day ahead on the US economic calendar. US jobless claims, Q4 GDP, and durable goods orders will draw interest. Softer growth and a pickup in jobless claims would deliver further GBP/USD support.
While it is a busier day on the economic calendar, no FOMC members are speaking today to influence. The Fed entered the blackout period on Saturday, January 21.