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GBP to USD Forecasts: Bulls Eye a Return to $1.2550 on BoE Chatter

By:
Bob Mason
Updated: May 15, 2023, 06:10 UTC

It is a quiet day for the GBP to USD. There are no UK stats to consider, leaving BoE and Fed commentary and US debt ceiling news to influence.

GBP to USD technical analysis - FX Empire

In this article:

It is a quiet start to the week for the GBP/USD. There are no UK economic indicators for investors to consider. The lack of stats will leave the GBP to USD in the hands of market risk sentiment ahead of the US session.

Updates from Washington on Debt Ceiling talks will be the key driver throughout the morning session. Over the weekend, US President Joe Biden provided some comfort, reportedly saying both sides are interested in reaching an agreement.

However, investors should monitor Bank of England commentary following the hawkish BoE interest rate hike and the GDP numbers. The Bank of England Chief Economist Huw Pill is on the calendar to hold a monetary policy report live Q&A.

GBP to USD Price Action

This morning, the GBP/USD was up 0.05% to $1.24530. A mixed start to the day saw the GBP/USD fall to an early low of $1.24428 before rising to a high of $1.24664.

GBP to USD finds early support.
GBPUSD 150523 Daily Chart

GBP to USD Technical Indicators

Resistance & Support Levels

R1 – $ 1.2510 S1 – $ 1.2414
R2 – $ 1.2574 S2 – $ 1.2381
R3 – $ 1.2670 S3 – $ 1.2285

The Pound needs to move through the $1.2477 pivot to target the First Major Resistance Level (R1) at $1.2510. A return to $1.25 would signal an extended breakout session. However, the Pound would need the central bank chatter and US economic indicators 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 $1.2574. The Third Major Resistance Level sits at $1.2670.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.2414 in play. However, barring another risk-off-fueled sell-off, the GBP/USD should avoid sub-$1.2350. The Second Major Support Level (S2) at $1.2381 should limit the downside. The Third Major Support Level (S3) sits at $1.2285.

GBP to USD support levels in play below the pivot.
GBPUSD 150523 Hourly Chart

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The GBP/USD sits below the 200-day EMA, currently at $1.24565. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 200-day EMA ($1.24565) would support a breakout from R1 ($1.2510) and the 100-day EMA ($1.25252) to target the 50-day EMA ($1.25504). However, failure to move through the 200-day EMA ($1.24565) would leave S1 ($1.2414) in view. A move through the 50-day EMA would send a bullish signal.

EMAs are bearish.
GBPUSD 150523 4-Hourly Chart

The US Session

Looking ahead to the US session, it is a relatively busy day on the US economic calendar. NY Empire State Manufacturing Index numbers for May will be in focus. Economists forecast a fall from 10.8 to -2.5, which would be bearish.

FOMC member commentary will also draw interest, with members Kashkari, Bostic, and Barkin speaking today. Hawkish chatter would weigh on the GBP to USD as investors search for clues on what is next from the Fed.

According to the CME FedWatch Tool, there was a 14.4% chance of a 25-basis point interest rate hike in June, down from 15.5% on Friday.

Beyond the economic calendar, the banking sector and the US debt ceiling will also need monitoring.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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