GBP/USD Price Forecast: $1.24 Resistance in Play

It is a relatively quiet day ahead on the UK economic calendar. For the Pound,  June CBI Industrial Trend Orders will provide direction later today. The numbers are due out at 11 am BST.

On the monetary policy front, Bank of England Monetary Policy Committee member Huw Pill is due to speak at 8:15 am BST. The Bank of England Chief Economist is speaking at the Institute of Chartered Accounts in England and Wales East of England economic summit: plenary discussion.

The markets will be looking for any views on inflation, the economy, and monetary policy.

On Friday, Pill warned that the BoE would raise interest rates more aggressively to curb soaring inflation if there were signs of a wage-price spiral taking hold or if companies continued to raise their prices.

According to the Guardian report, Pill told Bloomberg TV,

“If we see greater evidence that the current high level of inflation is becoming embedded in pricing behavior by firms, in wage-setting behavior by firms and workers, then that will be the trigger for this more aggressive action.”

On the issue of the BoE response to the surge in inflation, the Chief Economist of the BoE noted,

“We started earlier than some other central banks. Cumulatively, since we started (in December), we’ve done as much as other central banks have done more quickly in recent times.”

Pressure from Westminster has reportedly mounted, with UK Chancellor Rishi Sunak calling on the BoE to bring inflation back to target and “anchor it there.”

Price Action

At the time of writing, the Pound was up by 0.37% to $1.22913.

A bullish start to the day saw the Pound fall to a low of $1.22396 before striking a high of $1.23082.

The GBP/USD broke through the First Major Resistance Level at $1.2285.

Technical Indicators

The Pound will need to avoid the First Major Resistance Level and the $1.2242 pivot to target the Second Major Resistance Level at $1.2323.

A pickup in market risk appetite would support a return to $1.23 ahead of MPC member chatter and the stats.

An extended rally would test the resistance at $1.2350 and the Third Major Resistance Level at $1.2404.

A fall through the First Major Resistance Level and the pivot would bring the First Major Support Level at $1.2203 into play.

Barring an extended sell-off throughout the day, the Pound should avoid sub-$1.2150. The Second Major Support Level at $1.2160 should limit the downside.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal.

At the time of writing, the Pound sat above the 50-day EMA, currently at $1.22777. The 50-day EMA narrowed to the 100-day EMA. The 100-day EMA eased back from the 200-day EMA, however: Pound negative.

A move back through to $1.23 would support a run at the 100-day EMA, currently at $1.23889.