GBP to USD Forecasts: Bulls to Target $1.22 on Bullish Appetite

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

Easing fears of a global banking crisis delivered the GBP/USD with support this morning. However, the GBP/USD will likely face plenty of resistance at the $1.22 handle. The OBR economic projections painted a gloomy outlook, contrasting with the British Chamber of Commerce outlook.

With no economic indicators to consider, investors should track Bank of England member commentary. However, there are no Monetary Policy Committee Member speeches for investors to monitor, leaving chatter with the media to influence.

While divergence in central bank monetary policy has narrowed, the Fed remains more hawkish. The Bank of England will also have to contend with the prospects of a UK economic recession. US economic indicators have yet to raise the threat of a US recession.

GBP/USD Price Action

This morning, the GBP/USD was up 0.30% to $1.21444. A mixed start to the day saw the GBP/USD fall to an early low of $1.20908 before rising to a high of $1.21483.

Technical Indicators

The Pound needs to avoid the $1.2088 pivot to target the First Major Resistance Level (R1) at $1.2149. A return to $1.2150 would signal an extended breakout session. However, the Pound would need market risk sentiment and the US stats 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 $1.2189 and resistance at $1.22. The Third Major Resistance Level sits at $1.2290.

A fall through the pivot would bring the First Major Support Level (S1) at $1.2048 into play. However, barring another risk-off-fueled sell-off, the GBP/USD should avoid sub-$1.1950. The second Major Support Level (S2) at $1.1987 should limit the downside. The Third Major Support Level (S3) sits at $1.1885.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The GBP/USD sits above the 200-day EMA, currently at $1.20671. The 50-day EMA closed in on the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above the 200-day EMA ($1.20671) would support a breakout from R1 ($1.2149) to target R2 ($1.2189) and $1.22. However, a fall through the 200-day ($1.20671) and 50-day ($1.20601) EMAs would bring S1 ($1.2048) and the 100-day EMA ($1.20475) into play. A fall through the 50-day EMA ($1.20601) would signal a near-term bullish trend reversal.

The US Session

Looking ahead to the US session, it is a quiet day on the US economic calendar. Prelim Michigan Consumer Sentiment figures for March and industrial production numbers for February will draw interest.

Barring an unexpected fall in industrial production, the Michigan Consumer Survey should have more influence. Beyond the headline number, investors need to consider sub-components, including inflation expectations. In February, year-ahead inflation expectations rose from 3.9% to 4.1%.

However, there are also no FOMC member speeches to consider. The Fed entered the blackout period on Saturday, leaving investors to consider how the Fed would respond to the numbers.