GBP to USD Forecasts: Resistance at $1.2450 Lingers on Growth Outlook

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

While there are no stats, updates on the March budget, Brexit, and sentiment toward BoE monetary policy will remain areas of focus. While inflation in the US is softening, the US economy continues to outperform the UK economy, leaving the GBP/USD to face stern resistance at $1.2450.

However, progress on Brexit, a consumer-friendly March budget, and hawkish BoE chatter could support a move through the $1.2450 barrier.

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 down 0.01% to $1.23863. A mixed start to the day saw the GBP to USD rise to an early high of $1.23917 before falling to a low of $1.23750.

Technical Indicators

The Pound needs to move through the $1.2388 pivot to target the First Major Resistance Level (R1) at $1.2423. A move through the Friday high of $1.24188 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 $1.2458 and $1.25. The Third Major Resistance Level sits at $1.2532.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.2349 in play. However, barring a data-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 $1.2235.

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 $1.23420. 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 S1 ($1.2349) and the 50-day EMA ($1.23420) would support a breakout from R1 ($1.2423) to target R2 ($1.2458) and $1.25. However, a fall through S1 ($1.2349) and the 50-day EMA ($1.23420) would bring S2 $1.2309 into view. A fall through the 50-day EMA would send a bearish signal.

The US Session

It is a quiet start to a busy week on the US economic calendar. There are no economic indicators to provide direction in the US session. The lack of stats will leave market risk sentiment to influence in the second half of the day.

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