GBP/USD Price Forecast: Upbeat UK Stats to Test Sellers at $1.23

It is a busy day ahead on the UK economic calendar, with several key UK economic indicators in focus ahead of the market open. Today’s stats include GDP, industrial and manufacturing production, and trade data.

For the Pound, the second quarter GDP and June industrial and manufacturing production figures will likely draw the most interest.

With the Bank of England tasked with bringing inflation to target, weak numbers will raise question marks over the Bank’s ability to lift rates at an aggressive pace.

Economists have forecast a 1.3% economic contraction in June and a 0.3% contraction in the second quarter. Manufacturing and industrial production figures need to beat forecasts to provide a cushion. Economists forecast manufacturing production to slide by 1.8% and industrial production to fall by 1.3%.

While there are no scheduled Monetary Policy Committee member speeches to provide direction, today’s numbers could draw comment. Any response to the economic indicators will also need consideration.

GBP/USD Price Action

At the time of writing, the Pound was up 0.02% to $1.22013.

In the early hours, the Pound fell to an early low of $1.21947 before rising to a high of $1.22022.

Technical Indicators

The Pound will need to move through the $1.2210 pivot to target the First Major Resistance Level (R1) at $1.2238 and the Thursday high of $1.22492.

Today’s economic indicators will need to impress to support a run at $1.2250.

In the event of an extended rally, the GBP/USD pair could test the Second Major Resistance Level (R2) at $1.2277 and resistance at $1.23.

The Third Major Resistance Level (R3) sits at $1.2345.

Failure to move through the pivot would see the Pound test the First Major Support Level (S1) at $1.2170.

In case of an extended sell-off, fueled by weak stats, the GBP/USD pair could test the Second Major Support Level (S2) at $1.2142 and support at $1.21.

Weaker than forecast numbers would bring the Third Major Support Level (S3) at $1.2075 into play.

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 50-day EMA, currently at $1.21443.

After Wednesday’s bullish cross, the 50-day EMA widened from the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A 50-day EMA widening from the 200-day EMA would give the Pound a run at R1 ($1.2238). However, the direction will hinge on today’s stats.

A GBP fall through S1 (1.2170) would bring the 50-day EMA and S2 ($1.2142) into view. The 200-day EMA currently sits at $1.21277.

The US Session

It is a relatively quiet day for the Greenback. Prelim Michigan Consumer Sentiment figures for August will draw interest later today. Economists forecast an increase from 51.5 to 52.5. The latest inflation numbers, with better-than-expected labor market conditions and service sector activity, support a near-term pickup in sentiment.

With economic data on the quieter side, FOMC member chatter will also need monitoring.