- GBP/USD has gone into a consolidation phase above 1.2200.
- BOE members will testify before UK TSC later in the day.
- Near-term technical outlook shows the pair is struggling to gather recovery momentum.
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).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
Meta takes a guidance slide amidst the battle between yields and earnings
Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter GDP data.