GBP/USD Return to $1.16 and a Run at $1.17 Will Be US Data Dependent

It is a quiet day for the GBP/USD. According to the economic calendar, no UK economic indicators are due, leaving the Pound in the hands of the UK Government and the Bank of England.

With no economic indicators to consider and the Bank of England delivering its monetary policy decision on November 3, some uncertainty over the MPC’s November move could surround the Pound.

The UK Government delayed the fiscal statement to November 17, meaning Chancellor Jeremy Hunt and the Bank of England will need to be in close contact for the MPC to deliver a policy move that considers the Government’s plans.

Therefore, chatter from the UK Government and the BoE will remain the key drivers leading into the November 3 policy decision. However, no Bank of England Monetary Policy Committee members are on the calendar to deliver speeches today, leaving any comments to the media to influence.

GBP/USD Price Action

At the time of writing, the Pound was down 0.02% to $1.15573. A mixed start to the session saw the GBP/USD fall to an early low of $1.15438 before rising to a high of $1.15946.

Technical Indicators

The Pound needs to move through the $1.1585 pivot to target the First Major Resistance Level (R1) at $1.1621 and the Thursday high of $1.16454. Later today, US economic indicators and UK Government and BoE commentary will need to be GBP/USD-friendly to support a return to $1.16.

In the case of another extended rally, the GBP/USD would likely test the Second Major Resistance Level (R2) at $1.1682 and resistance at $1.17. The Third Major Resistance Level (R3) sits at $1.1779.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.1524 in play. However, barring a risk-off fueled sell-off, the Pound would likely avoid sub-$1.1450. The Second Major Support Level (S2) at $1.1487 should limit the downside.

The Third Major Support Level (S3) sits at $1.1390.

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 $1.14055.

After a bullish cross on Wednesday, the 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA closing in on the 200-day EMA, delivering bullish signals.

A bullish cross of the 100-day EMA through the 200-day EMA would support a breakout from R1 ($1.1621) to target R2 ($1.1682) and $1.17. However, a risk aversion-fueled slide through S1 ($1.1524) and S2 ($1.1487) would bring the 50-day EMA ($1.14055) into view.

The US Session

It is a busy day ahead on the US economic calendar, with inflation, personal spending, and consumer sentiment in the spotlight. A perfect storm could see bets of a 75-basis point Fed rate hike in December deliver a breakout session for the greenback.

Economists have forecast a modest improvement in consumer sentiment and another increase in personal spending. However, economists forecast softer inflation figures that could further ease bets of a 75-basis point hike in December.

No FOMC members will speak to guide the markets following today’s stats. The FOMC blackout period started on Saturday and will extend until November 3.

Going into the Thursday session, the FedWatch Tool had the probability of November and December rate hikes at 84.8% and 36.6%, respectively. One week ago, the likelihood of a 75-basis point hike in December stood at 45.6%.