GBP to USD Forecasts: Bears Eye Sub-$1.24 on Recession Fears and the BoE

It is a relatively quiet day ahead for the GBP/USD. Construction PMI numbers and house price figures for March will draw interest today. Weaker than expected housing sector data would likely weigh on the GBP/USD as recession fears grip the global financial markets.

Economists forecast the Construction PMI to fall from 54.6 to 53.5 and house prices to fall by 0.3%.

With the economic calendar on the light side, investors should track BoE member commentary. However, no Monetary Policy Committee members are on the calendar to deliver speeches today, leaving chatter with the media to influence.

On Tuesday. MPC member Silvana Tenreyro talked about cutting rates earlier and faster. Tenreyro was also in focus on Wednesday, discussing the impact of a persistent rise in bank funding costs on the UK economy.

GBP/USD Price Action

This morning, the GBP/USD was down 0.16% to $1.24412. A bearish start to the day saw the GBP/USD fall from an early high of $1.24668 to a low of $1.24369.

Technical Indicators

The Pound needs to move through the $1.2469 pivot to target the First Major Resistance Level (R1) at $1.2506 and the Wednesday high of $1.25144. A return to $1.25 would signal an extended breakout session. However, the Pound would need risk-on sentiment to support a breakout session.

In the event of an extended rally, the GBP/USD would likely test the Second Major Resistance Level (R2) at $1.2552. The Third Major Resistance Level sits at $1.2634.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.2424 in play. However, barring a risk-off-fueled sell-off, the GBP/USD should avoid sub-$1.2350. The Second Major Support Level (S2) at $1.2387 should limit the downside. Third Major Support Level (S3) sits at $1.2305.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The GBP/USD sits above the 50-day EMA, currently at $1.2376. The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($1.2376) would support a breakout from R1 ($1.2506) to target R2 ($1.2552). However, a fall through S1 ($1.2424) would give the bears a run at S2 ($1.2387) and the 50-day EMA ($1.2376). A fall through the 50-day EMA would send a bearish signal.

The US Session

Looking ahead to the US session, it is a quiet day on the US economic calendar. Weekly jobless claims figures will draw interest. Following the disappointing JOLTs job openings and ADP nonfarm employment change numbers, a larger-than-expected rise in jobless claims would pressure the GBP/USD on US recessionary fears.

Investors should also monitor Fed chatter on monetary policy and the US economy.