GBP/USD Price Forecast: A Return to $1.25 in the Hands of the BoE

After a busy start to the week on the UK economic calendar, there is little for the markets and GBP to consider by way of economic data from the UK. GDP and employment numbers disappointed this week, leading to more chatter of a UK recession.

With no major stats for the markets to consider today, the market focus will be on the Bank of England monetary policy decision.

Numbers from the week for the Bank of England to consider include a second monthly economic contraction in April and a rise in the unemployment rate to 3.8%.

While economic data disappointed, inflationary pressure remains the Bank’s major concern. The FED’s 75-basis point rate hike on Wednesday could give the BoE incentive to deliver a bigger than forecasted hike to slow the downward trend in the Pound.

GBP/USD Price Action

At the time of writing, the GBP was down by 0.24% to $1.21468 against the dollar.

A mixed start to the day saw the Pound rise to an early morning high of $1.2189 before falling to a low of $1.21413.

The Pound left the Major Support and Resistance Levels untested early on.

Technical Indicators

The Pound will need to avoid the $1.2122 pivot to target the First Major Resistance Level at $1.2256.

Today, the Bank of England monetary policy decision and forward guidance will be the key to any price action.

An extended rally would test the Second Major Resistance Level at $1.2338 and resistance at $1.24.

A fall through the pivot would bring the First Major Support Level at $1.2040 into play.

Barring another extended sell-off throughout the day, the Pound should avoid sub-$1.19. The Second Major Support Level at $1.1907 should limit the downside.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. The Pound sits below the 50-day EMA, currently at $1.22892. The 50-day EMA fell back from the 100-day EMA. The 100-day EMA eased back from the 200-day EMA: Pound negative.

A return to $1.2250 would give the bulls a run at the 50-day EMA and a look at the 100-day EMA, currently at $1.2389.