GBP/USD Forecast: Can the pound rebound during BOE policy hearing?

GBP/USD snapped a six-day losing streak on Friday but ended up losing nearly 200 pips on a weekly basis. The pair seems to have gone into a consolidation phase above 1.2200 early Monday as investors get ready for the Bank of England's (BOE) monetary policy hearing.

Four members of the BOE's Monetary Policy Committee, including Governor Andrew Bailey and hawkish members Jonathan Haskel and  Michael Saunders, will testify before the Treasury Select Committee from 14:15 GMT to 16:15 GMT.

The British pound came under heavy selling pressure after the BOE warned that the UK economy could go into recession this year. In case hawkish members shift the focus to the inflation outlook and policy tightening prospects during the testimony, GBP/USD could extend its rebound. However, any remarks on the worsening economic outlook could cause the British pound's gains to remain limited.

Nevertheless, on top of the potential negative impact of the ongoing Russia-Ukraine conflict on the UK economy, renewed Brexit concerns should make it difficult for GBP/USD to go into a steady recovery in the near term. While speaking to Sky News on Sunday, Ireland's foreign minister Simon Coveney warned that the UK making changes unilaterally to the Northern Ireland Protocol would be considered to be a breach of international law.

In the second half of the day, the NY Fed's Empire State Manufacturing Survey will be looked upon for fresh impetus but the risk perception is likely to continue to drive the greenback's valuation.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the four-hour chart stays below 50 and GBP/USD is trading near the 20-period SMA, showing that the pair is struggling to gather recovery momentum. On the upside, 1.2300 (static level, psychological level) aligns as first resistance before 1.2330 (50-period SMA) and 1.2370 (static level).

On the downside, a four-hour close below 1.2200 (psychological level, static level) could be taken as a bearish development and open the door for additional losses toward 1.2150 (static level, multi-year lows set on Friday).