GBP to USD Forecasts: Bulls to Target $1.2450 on Fiscal Support Talk

It is a quiet day ahead for the GBP/USD, with no UK economic indicators for the markets to consider. Last week, UK inflation and wage growth figures suggested the need for the Bank of England to take a more aggressive interest rate path to bring inflation to target.

Also, no Monetary Policy Committee Members are speaking today to provide direction, leaving investors to monitor chatter with the media. Hawkish commentary would provide further GBP/USD gains.

This morning, the GBP/USD found early support. Risk-on sentiment through the Asian session sent the GBP/USD to a high of $1.24478 before easing back. Expectations of fiscal support in the March budget contributed to the early gains.

According to a Reuters report, CBI Director-General Tony Danker praised the UK Prime Minister for handling the mini-budget crisis. However, Danker also noted that government plans to scrap all EU-generated laws by the end of the year could send the industry into chaos.

GBP/USD Price Action

At the time of writing, the Pound was up 0.20% to $1.24209. A mixed start to the day saw the GBP/USD fall to an early low of $1.23928 before rising to a high of $1.24478.

The GBP/USD briefly broke through the First Major Resistance Level (R1) at $1.2422.

Technical Indicators

The Pound needs to avoid the $1.2379 pivot to retarget the First Major Resistance Level (R1) at $1.2422 and the morning high of $1.24478. A move through the morning high would signal an extended breakout session. However, the Pound would need risk-on sentiment to support a breakout session.

In the event of an extended rally, the GBP to USD would likely test the Second Major Resistance Level (R2) at $1.2448 and resistance at $1.25. The Third Major Resistance Level sits at $1.2517.

A fall through the pivot would bring the First Major Support Level (S1) at $1.2353 into play. However, barring a risk-off-fueled sell-off, the GBP/USD should avoid sub-$1.23. The second Major Support Level (S2) at $1.2309 should limit the downside.

The Third Major Support Level (S3) sits at $1.2240.

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 $1.22768. The 50-day EMA pulled further away from the 100-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 ($1.22768) would support a breakout from R1 ($1.2422) to target R2 ($1.2448) and $1.25. However, a fall through S1 ($1.2353) would bring S2 ($1.2309) and the 50-day EMA ($1.22768) into view. A fall through the 50-day EMA would send a bearish signal.

The US Session

It is a quiet day ahead on the US economic calendar. There are no US economic indicators to provide direction in the US session. The lack of stats will leave the GBP/USD in the hands of market risk sentiment.

There are also FOMC members speaking today, with the Fed having entered the blackout period on Saturday.