GBP to USD Forecasts: Fed Fear to Give the Bears a Look at Sub-$1.23

It is a quiet day ahead for the GBP/USD. There are no UK economic indicators for the markets to consider today. While there are no stats, mortgage lending and net lending to individual numbers will draw interest along with the Consumer Credit Report for December.

The consumer credit and net lending to individuals will reflect the impact of the Bank of England’s interest rate hikes on consumer credit appetite. A marked decline could signal a continued downward trend in consumption.

Away from the economic calendar, UK politics and Brexit will remain focal points along with March Budget chatter.

While investors consider the policy outlook, no Monetary Policy Committee Members are speaking today, leaving investors to monitor chatter with the media.

GBP/USD Price Action

At the time of writing, the Pound was flat at $1.23507. A mixed start to the day saw the GBP/USD fall to an early low of $1.23411 before steadying.

Technical Indicators

The Pound needs to move through the $1.2368 pivot to target the First Major Resistance Level (R1) at $1.2400 and the Monday high of $1.24172. A return to $1.24 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 $1.2449. The Third Major Resistance Level sits at $1.2530.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.2319 in play. However, barring a data-fueled sell-off, the GBP/USD should avoid sub-$1.2250. The second Major Support Level (S2) at $1.2287 should limit the downside.

The Third Major Support Level (S3) sits at $1.2207.

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 $1.23482. 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 50-day EMA ($1.23482) would support a breakout from R1 ($1.2400) to target R2 ($1.2449). However, a fall through the 50-day EMA ($1.23482) would bring S1 $1.2319 into view. A fall through the 50-day EMA would send a bearish signal.

The US Session

It is a busy day on the US economic calendar. Consumer confidence numbers for January will provide the EUR/USD direction. Other stats include Chicago PMI and housing sector numbers that should have a muted impact on the EUR/USD and riskier assets.

Economists forecast the CB Consumer Confidence Index to rise from 108.3 to 109.0. Better-than-expected numbers would weigh on the GBP/USD.

No FOMC members are speaking today. The Fed entered the blackout period on Saturday, January 21.