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GBP to USD Forecasts: Bulls to Target $1.24 on Inflation Pressures

By:
Bob Mason
Updated: Mar 29, 2023, 05:30 UTC

It is a quiet day ahead for the GBP to USD. BoE reports and MPC Member Catherine Mann will be in focus. Hawkish chatter would support a breakout.

GBP to USD tech analysis - FX Empire

In this article:

It is a relatively quiet day ahead for the GBP/USD. There are no UK economic indicators for investors to consider. However, while there is no UK economic data to consider, the Bank of England will release the latest Consumer Credit and Financial Policy and Record reports.

The Consumer Credit report will likely garner more interest, with the BoE needing to assess the impact of rising interest rates on consumer borrowing and spending.

However, elevated inflation and a more resilient-than-expected UK economy support further policy moves to tame inflation. On Monday, Bank of England Governor Bailey noted that the BoE would lift rates higher should inflationary pressures persist. The UK annual inflation rate unexpectedly accelerated to 10.4% in February.

Today, Monetary Policy Committee member Catherine Mann will deliver a speech at an Inflation and Monetary Policy Conference. Forward guidance on monetary policy to combat sticky inflationary pressures would move the dial.

GBP/USD Price Action

This morning, the GBP/USD was down 0.08% to $1.23318. A bearish start to the day saw the GBP/USD fall from an early high of $1.23415 to a low of $1.23206 before finding support.

GBP to USD sees red.
GBPUSD 290323 Daily Chart

Technical Indicators

The Pound needs to avoid the $1.2323 pivot to target the First Major Resistance Level (R2) at $1.2367. A move through the Tuesday high of $1.2349 would signal an extended breakout session. However, the Pound would need risk-on sentiment and favorable BoE reports 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 $1.2394 and resistance at $1.24. The Third Major Resistance Level sits at $1.2464.

A fall through the pivot would bring the First Major Support Level (S1) at $1.2297 into play. However, barring a risk-off-fueled sell-off, the GBP/USD should avoid sub-$1.2250. The second Major Support Level (S2) at $1.2252 should limit the downside. The Third Major Support Level (S3) sits at $1.2182.

GBP to USD resistance levels in play above the pivot.
GBPUSD 290323 Hourly Chart

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 $1.22439. 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 Major Support Levels and the 50-day EMA ($1.22439) would support a breakout from R1 ($1.2367) to target R2 ($1.2394) and $1.24. However, a fall through S1 ($1.2297) would bring S2 ($1.2252) and the 50-day EMA ($1.22439) into view. A fall through the 50-day EMA would send a bearish signal.

EMAs remain bullish.
GBPUSD 290323 4-Hourly Chart

The US Session

Looking ahead to the US session, it is a quiet day on the US economic calendar. The housing sector will be in the spotlight, with pending home sales due out. With the markets focused on Fed monetary policy intentions, the figures should have limited influence on the GBP/USD pair.

However, the second day of testimony on Capitol Hill and Fed chatter could move the dial. Warnings of a credit crunch would weigh on the GBP/USD.

Investors should also monitor Fed chatter on monetary policy and the US economy.

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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