GBP to USD Forecasts: A Return to $1.22 in the Hands of Huw Pill

It is a quiet day ahead for the GBP/USD. There are no UK economic indicators for the markets to consider today. The lack of stats will leave the GBP/USD in the hands of market risk sentiment.

However, following the Friday breakout, the GBP/USD could give up some of the gains later in the session, with the gloomy economic outlook likely to continue pressuring the Pound near term.

While there are no economic indicators to consider, investors should monitor Monetary Policy Committee member chatter. BoE Chief Economist Huw Pill will speak at the Money Market Association of New York University (Money Marketeers) Event ‘The UK Economic and Monetary Policy Outlook’ (11.45 pm GMT).

Over the weekend, MPC member Catherine Mann commented on the energy price caps.

According to Bloomberg, Catherine Mann said that energy price caps could allow a shift in spending to other goods while also stating that removing the caps would create inflation uncertainty. Mann added that the caps would ‘mechanically reduce the inflation rates that are relevant for my monetary policy decision.’

GBP/USD Price Action

At the time of writing, the Pound was up 0.25% to $1.21165. A bullish start to the day saw the GBP/USD rise from an early low of $1.20794 to a high of $1.21165.

Technical Indicators

The Pound needs to avoid the $1.2009 pivot to target the First Major Resistance Level (R1) at $1.2177. A return to $1.2150 would signal a bullish afternoon session. However, the Pound would need risk-on sentiment and hawkish MPC member chatter to support a breakout session.

In the event of an extended rally, the GBP to USD would likely test resistance at $1.22 but fall short of the Second Major Resistance Level (R2) at $1.2267. The Third Major Resistance Level sits at $1.2526.

A fall through the pivot would bring the First Major Support Level (S1) at $1.1918 into play. However, barring a risk-off-fueled sell-off, the GBP/USD should avoid sub-$1.1850 and the Second Major Support Level (S2) at $1.1750.

The Third Major Support Level (S3) sits at $1.1492.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The GBP/USD sits above the 100-day EMA, currently at $1.20558. The 50-day EMA crossed through the 200-day EMA, with the 100-day EMA pulling away from the 200-day EMA, delivering bullish signals.

A hold above the 100-day EMA ($1.20558) would support a run at R1 ($1.2177) and $1.22. However, a bearish cross of the 50-day EMA through the 200-day EMA would bring S1 ($1.1918) and sub-$1.19 into view

The US Session

It is a quiet day ahead on the US economic calendar. There are no US economic indicators to consider, leaving FOMC member chatter and market risk sentiment to guide the GBP/USD through the US session.