GBP to USD Forecasts: Bulls to Target $1.24 on SVB Hearing

It is a busy day ahead for the GBP/USD. There are no UK economic indicators for investors to consider. While there are no UK stats to consider, the Bank of England and the UK banking sector will be in the spotlight.

BoE Governor Andrew Bailey, Sam Woods, and Dave Ramsden will attend a Treasury Select Committee hearing on Silicon Valley Bank (SVB).

With heightened sensitivity to the banking sector, the hearing could have a material impact on the GBP/USD. Heightened BoE concerns over the fallout from the collapse of Silicon Valley Bank could signal a BoE pause on policy goals to bring inflation to target.

Commentary relating to the influence of the SVB collapse on the Bank of England’s policy outlook will likely be the focal point. It is worth noting that the demise of Silicon Valley Bank stemmed from Fed monetary policy and the effect of higher interest rates on the Silicon Valley Bank’s balance sheet.

Ahead of the hearing, market risk sentiment will remain the key driver. Bank of England Governor Bailey delivered a speech at the London School of Economics on Monday. 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.

GBP/USD Price Action

This morning, the GBP/USD was up 0.23% to $1.23148. A bullish start to the day saw the GBP/USD rally from a low of $1.22784 to a high of $1.23215. The GBP/USD broke through the First Major Resistance Level (R1) at $1.2313.

Technical Indicators

The Pound needs to hold above R1 and the $1.2266 pivot to target the Second Major Resistance Level (R2) at $1.2341. A move through the morning high of $1.23215 would signal an extended breakout session. However, the Pound would need risk-on sentiment and comforting words from the BoE chatter to support a breakout session.

In the event of an extended rally, the GBP/USD would likely test resistance at $1.24. The Third Major Resistance Level sits at $1.2415.

A fall through R1 and the pivot would bring the First Major Support Level (S1) at $1.2239 into play. However, barring a risk-off-fueled sell-off, the GBP/USD should avoid sub-$1.22 and the second Major Support Level (S2) at $1.2192. The Third Major Support Level (S3) sits at $1.2117.

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 $1.22211. 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 S1 ($1.2239) and the 50-day EMA ($1.22211) would support a breakout from R1 ($1.2313) to target R2 ($1.2341) and $1.24. However, a fall through S1 ($1.2239) and the 50-day EMA ($1.22211) would bring the Major Support Levels into view. A fall through the 50-day EMA would send a bearish signal.

The US Session

Looking ahead to the US session, it is a busy day on the US economic calendar. Goods trade data, housing sector numbers, and the all-important CB Consumer Confidence will be in the spotlight. We expect the consumer confidence survey to have more influence in the afternoon session.

While the economic indicators will provide the GBP/USD pair with direction, the Federal Reserve will also be in focus. The Committee on Banking, Housing, and Urban Affairs will meet in an open session to conduct a hearing on “Recent Bank Failures and the Federal Regulatory Response.”