GBP/USD Price Forecast: BoE Governor Bailey to Test Buyer Interest

It’s another quiet day ahead for the Pound, with no stats to consider on the UK economic calendar.

While there are no economic indicators to consider, Bank of England speeches will draw interest once more.

This morning, Monetary Policy Committee member Jon Cunliffe will speak about crypto market developments (9am BST). While discussing cryptos, any questions related to the economic outlook or monetary policy will be of interest.

Later in the day, Bank of England Governor Andrew Bailey will be in focus. Governor Bailey will deliver a speech on the economic landscape. The BoE will publish the text at 6pm BST.

On Monday, BoE Governor Bailey talked of inflation falling sharply in 2023. Governor Bailey also viewed inflation as returning to target the following year.

However, expectations are for inflation to hit double digits this year. While the economy has ground to a halt, labor market conditions remain stable, raising concerns of wage inflation.

In June, BoE Chief Economist Huw 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.

While we expect Pound sensitivity to any commentary on monetary policy or the economy, market risk sentiment will continue to influence.

GBP/USD Price Action

At the time of writing, the Pound was down 0.31% to $1.18507.

This morning, the Pound rose to an early high of $1.19098 before falling to a low of $1.18456.

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

Technical Indicators

A GBP/USD move through the $1.1930 pivot would bring the First Major Resistance Level (R1) at $1.1993 and the Monday high of $1.20365 into play.

A pickup in risk sentiment would support a return to $1.1950.

In the event of an extended rally, the GBP/USD pair would test the Second Major Resistance Level (R2) at $1.2100.

The Third Major Resistance Level (R3) sits at $1.2270.

Failure to move through the pivot would bring the First Major Support Level (S1) at $1.1824 into play.

In case of an extended sell-off, the GBP/USD pair could test the Second Major Support Level (S2) at $1.1760 and support at $1.1750.

The Third Major Support Level (S3) sits at $1.1590.

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

At the time of writing, the Pound sat below 50-day EMA, currently at $1.20123.

The 50-day EMA slipped back from the 100-day EMA. The 100-day EMA fell back from the 200-day EMA: GBP/USD negative.

A move through R1 and the 50-day EMA would support a run at R2.

The US Session

There are no material stats for the markets to consider, leaving risk appetite to provide the GBP/USD pair with direction.