GBP to USD Forecasts: Sub-$1.22 in View on PMI and Retail Sales Figures

Bob Mason
Updated: Mar 24, 2023, 06:34 UTC

It is a busy day ahead for the GBP to USD, with retail sales and private sector PMIs in focus. Weak numbers would ease near-term pressure on the BoE.

GBP to USD technical analysis - FX Empire

In this article:

It is a busy day ahead for the GBP/USD, with UK retail sales and prelim private sector PMIs in focus.

Following Thursday’s Bank of England interest rate hike, the economic indicators will give investors an idea of what to expect from the BoE in the months ahead. The Bank warned of the need for further tightening should inflationary pressures persist.

Strong retail sales figures and a pickup in input and output price inflation across the UK private sector would keep the BoE under pressure.

With economic data on the heavier side, investors should track Bank of England member commentary. Monetary Policy Committee Member Catherine Mann will speak.

GBP/USD Price Action

This morning, the GBP/USD was down 0.05% to $1.22799. A mixed start to the day saw the GBP/USD fall to an early low of $1.22611 before steadying.

GBP to USD sees red.
GBPUSD 240323 Daily Chart

Technical Indicators

The Pound needs to move through the $1.2296 pivot to target the First Major Resistance Level (R1) at $1.2333 and the Thursday high of $1.23433. A return to $1.23 would signal an extended breakout session. However, the Pound would need hotter-than-expected economic indicators and hawkish BoE chatter 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 $1.2380 and resistance at $1.24. The Third Major Resistance Level sits at $1.2464.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.2249 in play. However, barring a PMI-fueled sell-off, the GBP/USD should avoid sub-$1.22. The second Major Support Level (S2) at $1.2213 should limit the downside. The Third Major Support Level (S3) sits at $1.2129.

GBP to USD support levels in play below the pivot.
GBPUSD 240323 Hourly Chart

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 $1.21970. The 50-day EMA widened from the 200-day EMA, with the 100-day EMA pulling away from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($1.21970) would support a breakout from R1 ($1.2333) to target R2 ($1.2380) and $1.24. However, a fall through S1 ($1.2249) would give the bears a run at S2 ($1.2213) and the 50-day EMA ($1.21970). A fall through the 50-day EMA would send a bearish signal.

EMAs are bullish.
GBPUSD 240323 4-Hourly Chart

The US Session

Looking ahead to the US session, it is a busy day on the US economic calendar. US private sector PMIs and core durable goods orders will draw interest. However, we expect the prelim Services PMI to have more impact on market risk sentiment and the GBP/USD.

Following the Wednesday rate hike, FOMC member James Bullard will also move the dial. Investors will want confirmation of a pause on rate hikes to ease pressure on the banking sector and fears of a more pronounced credit crunch.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

Did you find this article useful?