GBP hinges on BoE and Fed to Control Pound Trend in Weekly Forecast. By using Fed direction, USD considerations become more attractive when BoE uncertainty decreases – (Jerome Powell)
GBPUSD Bearish Predict.
The British pound gets ready for a busy week that includes pronouncements on interest rates from the Federal Reserve and the Bank of England, respectively. The BoE has hinted at yet another rate increase of 50 basis points.
Although this has already been included into GBP crosses to a great extent, the vote split revealed at the February summit may cause some price fluctuations.
The majority at the previous meeting was in support of 50 bps, but in light of recent economic statistics, there could be further votes split between 50 bps and 25 bps, with the BoE’s Tenreyro and Dhingra possibly holding their present position.
If so, the pound could likely fall as a consequence. However, with terminal rates likely to be around 4.5% in 2023 (as consented to by Governor Bailey).The BoE may continue on this course in order to keep its structural legitimacy. On the other hand, lower energy prices may be reducing recessionary concerns.
GBPUSD Preview
Markets are analyzing the Fed’s projection of a 5% terminal rate for 2023 from a USD perspective based on easing inflationary pressures. On the contrary, the job market has proven to be very robust, and the Non-Farm Payroll (NFP) number will be eagerly scrutinized the following week. Additionally, ISM services data is essential given that the U.S. economy is primarily powered by services A closer eye will be on wage numbers as well
GBP Technical Perspective
Daily GBPUSD market activity has recently been confined to the peaks reached in December 2022. Also, bulls haven’t yet been able to decisively breach through this resistance area. Based on how the meeting goes, the fundamental drivers for the upcoming week might undoubtedly act as the impetus.
Again for second time since its breach in December carried out according to strategy. Bears will be keeping a close eye to the building ascending wedge formation. A leg down is probable given that the Relative Strength Index (RSI) level is not far from overbought zone. However, should the daily candle finish just above psychological support threshold of 1.2500, the wedge pattern would be invalidated.
Major resistance levels:
- 1.2500
- 1.2407
Major support levels:
- Wedge support
- 1.2154/200-day SMA
- 1.2000
