GBP to USD Forecasts: Sub-$1.19 in View on Weak Retail Sales

It is back to business for the GBP/USD today. After a quiet Thursday session, UK retail sales figures for January will draw interest.

Following a mixed bag of stats that included a pickup in wage growth but softer inflation numbers, the retail sales figures could set the tone for the March meeting.

Economists forecast UK retail sales to fall by 0.3% in January, following a 1.0% slide in December. A January fall would be the third consecutive monthly decline.

After a busy week on the economic calendar, Monetary Policy Committee member chatter will also need consideration. However, there are no MPC members on the calendar to speak today, leaving investors to monitor commentary with the media.

Away from the economic calendar, Brexit will also be in the spotlight, with Rishi Sunak looking to wrap up the Ireland protocol deal.

GBP/USD Price Action

At the time of writing, the GBP/USD was down 0.35% to $1.19495. A bearish start to the day saw the GBP/USD fall from an early high of $1.19935 to a low of $1.19412. The First Major Support Level (S1) at $1.1947 delivered early support.

Technical Indicators

The Pound needs to move through the $1.2010 pivot to target the First Major Resistance Level (R1) at $1.2055 and the Thursday high of $1.20742. A return to $1.20 would signal an extended breakout session. However, the Pound would need US economic indicators and hawkish MPC member chatter to support a breakout session.

In the event of an extended rally, the GBP to USD would likely test the Second Major Resistance Level (R2) at $1.2119. The Third Major Resistance Level sits at $1.2228.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.1947 in play. However, barring a data-fueled sell-off, the GBP/USD should avoid sub-$1.19. The second Major Support Level (S2) at $1.1902 should limit the downside.

The Third Major Support Level (S3) sits at $1.1793.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The GBP/USD sits below the 50-day EMA, currently at $1.20916. The 50-day EMA fell back from the 200-day EMA, with the 100-day EMA pulling back the 200-day EMA, delivering bullish signals.

A move through R1 ($1.2055) would give the bulls a run at the 50-day ($1.20916) and R2 ($1.2119). However, failure to move through the 50-day EMA ($1.20916) would support a slide through S1 ($1.1947) to test S2 ($1.1902).

The US Session

It is a quiet day on the US economic calendar. There are no material stats from the US to draw interest. The lack of stats will leave the GBP/USD in the hands of FOMC member chatter. FOMC members Bowman speaks today.