GBP to USD Forecasts: Bulls Eye $1.2750 on Weaker US Stats

Highlight

• The GBP to USD found support this morning, with dip buyers providing early gains.
• There are no UK economic indicators today to change the narrative, leaving BoE commentary to move the dial.
• It is a busier day on the US economic calendar, leaving the pair in the hands of consumer confidence numbers and Fed chatter.

It is a quiet day ahead for the GBP to USD. There are no UK economic indicators for investors to consider today. The lack of stats will leave the GBP to USD in the hands of market risk sentiment and central bank chatter early in the day.

Investor sentiment toward the UK economic outlook and Bank of England monetary policy goals became uncertain after the surprise 50-basis point interest rate hike. The markets will need another round of economic indicators to assess the impact of aggressive BoE rate hikes on the UK economy.

June private sector PMIs were disappointing. Without a marked softening in inflationary pressures and wage growth, the BoE will feel pressure to deliver more after the summer and risk a recession.

While there are no stats to consider, BoE MPC members Swati Dhingra and Silvana Tenreyro are on the calendar to deliver speeches today. With both voting to leave interest rates at 4.50%, hawkish chatter would further fuel UK recessionary jitters.

GBP to USD Price Action

This morning, the GBP/USD was up 0.13% to $1.27268. A mixed start to the day saw the GBP to USD fall to an early low of $1.27029 before rising to a high of $1.27365.

Technical Indicators GBPUSD

Looking at the EMAs and the 4-hourly chart, the EMAs sent bullish signals. The GBPUSD sat above the 50-day EMA, currently at $1.27134. The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($1.27134) would support a breakout from R1 ($1.2743) to target R2 ($1.2776) and $1.28. However, a fall through the 50-day EMA ($1.27134) would signal a slide through S1 ($1.2683) to bring S2 ($1.26550) and the 100-day EMA ($1.26550) into view. A fall through the 50-day EMA would send a bearish signal.

Resistance & Support Levels

The US Session

Looking forward to the US session, US core durable goods and CB Consumer Confidence numbers will draw interest. A fall in the CB Consumer Confidence Index to below 100 would likely overshadow upbeat core durable goods orders.

Other stats include US new home sales, building permits, and house price numbers. However, these are unlikely to influence market sentiment toward Fed monetary policy.

This morning, bets on a July Fed interest rate hike remained elevated despite manufacturing sector woes. According to the CME FedWatch Tool, the probability of a 25-basis point July Fed rate hike stood at 75.6% versus 71.9% on Friday.

Significantly, the chances of the Fed lifting rates to 5.75% in September stood at 11.3%, down from 11.5% on Friday, easing bets on a further widening in monetary policy divergence in favor of the greenback.