GBP to USD Forecasts: Risk Sentiment to Test Buyers at $1.2050
It is a quiet start to the week for the GBP/USD. There are no economic indicators for investors to consider today. The lack of stats will leave the GBP/USD in the hands of market risk sentiment.
Easing fears of a global banking crisis delivered the GBP/USD with support this morning. News of UBS AG (UBS) acquiring Credit Suisse Group AG (CS) was positive for riskier assets, though fears of a deepening crisis will likely linger.
However, the GBP/USD will likely face stern resistance at the $1.22 handle. With the Bank of England in action this week, the OBR economic projections and the banking crisis may force the BoE into a more dovish policy stance.
While there are no economic indicators to consider, investors should track Bank of England member commentary. However, there are no Monetary Policy Committee Member speeches for investors to monitor, leaving chatter with the media to influence.
GBP/USD Price Action
This morning, the GBP/USD was up 0.05% to $1.21787. A mixed start to the day saw the GBP/USD fall to a low of $1.21682 before steadying.
The Pound needs to avoid the $1.2155 pivot to target the First Major Resistance Level (R1) at $1.2219. A return to $1.22 would signal an extended breakout session. However, the Pound would need market risk sentiment 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 $1.2265 and resistance at $1.23. The Third Major Resistance Level sits at $1.2374.
A fall through the pivot would bring the First Major Support Level (S1) at $1.2109 into play. However, barring a risk-off-fueled sell-off, the GBP/USD should avoid sub-$1.2050 and the second Major Support Level (S2) at $1.2045. The Third Major Support Level (S3) sits at $1.1935.
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 $1.20830. The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.
A hold above the 50-day EMA ($1.20830) would support a breakout from R1 ($1.2219) to target R2 ($1.2265) and $1.23. However, a fall through S1 ($1.2109) and the 50-day ($1.20830) and 200-day ($1.20729) EMAs would bring the 100-day EMA ($1.20610) and S2 ($1.2045) into play. A fall through the 50-day EMA ($1.20601) would send a bearish signal.
The US Session
Looking ahead to the US session, it is a quiet day on the US economic calendar. There are no US economic indicators for investors to consider. The lack of stats will leave bank-related news and sentiment toward the Fed to provide direction.
There are also no FOMC member speeches to consider. The Fed entered the blackout period on Saturday, leaving investors to consider how the Fed will respond to the banking sector crisis.