GBP/USD Price Forecast: Pelosi Visit to Test Buyers at $1.21

It is a quiet morning on the UK economic calendar. House price figures for July were out this morning. However, with the markets looking ahead to Thursday’s Bank of England monetary policy decision, the numbers had a muted impact on the Pound.

With fears of a US recession resurfacing, the GBP/USD pair could find support through the session. The markets expect a hawkish 50 basis point rate hike that could place monetary policy divergence in favor of the Pound.

However, on the geopolitical risk front, Nancy Pelosi’s anticipated Taiwan visit could test the appetite for riskier assets and the Pound. China has issued a warning and a Pelosi visit could strain US-China relations and interest in the Pound.

GBP/USD Price Action

At the time of writing, the Pound was down by 0.17% to $1.22254.

This morning, the Pound rose to an early high of $1.22792 before falling to a low of $1.22247.

Technical Indicators

The Pound will need to move through the $1.2232 pivot to bring the First Major Resistance Level (R1) at $1.2308 into play.

The GBP/USD pair would need a marked pickup in risk sentiment to support a breakout from the Monday high of $1.22932.

In the event of an extended rally, the GBP/USD pair would test the Second Major Resistance Level (R2) at $1.2369 and resistance at $1.24.

The Third Major Resistance Level (R3) sits at $1.2505.

Failure to move through the pivot would likely see the Pound test the First Major Support Level (S1) at $1.2171 and support at $1.2150.

In case of an extended sell-off, the GBP/USD pair could test the Second Major Support Level (S2) at $1.2096.

The Third Major Support Level (S3) sits at $1.1959.

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

At the time of writing, the Pound sat above the 200-day EMA, currently at $1.21193.

The 50-day EMA converged on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering positive signals.

A bullish cross of the 50-day EMA to the 200-day EMA should support a move through R1 to target R2 and $1.24.

However, a fall through S1 would bring the 200-day EMA, the 50-day EMA, currently at $1.21158, and S2 into play.

The US Session

It is a quiet US economic calendar, with JOLTs job openings in focus. As investors digest the latest economic indicators, weak numbers could test the appetite for riskier assets ahead of Friday’s Nonfarm payrolls.

Investors will also need to look out for any FOMC member chatter and updates from Capitol