GBP/USD Forecast: Strong resistance emerges at 1.2150

GBP/USD has gone into a consolidation phase at around 1.2100 after having registered its highest daily close in over three months at 1.2113. The short-term technical outlook suggests that the pair remains bullish but static resistance seems to have formed at 1.2150.

Thin trading conditions on Thanksgiving Day made it difficult for GBP/USD to gather momentum but hawkish commentary from Bank of England (BOE) policymakers helped the Pound Sterling holds its ground against the US Dollar.

BOE Deputy Governor Dave Ramsden noted that his bias was towards further policy tightening and added that he was expecting the fiscal tightening in the UK to have little impact on inflation forecasts. Additionally, BOE policymaker Catherine Mann reminded that the BOE has communicated effectively that rates need to rise and that market expectations before the November meeting were too high.

With financial markets turning quiet on Black Friday, GBP/USD is likely to extend its sideways grind. US stock index futures trade modestly higher on the day but this development by itself is not enough to assume that Wednesday's risk rally will pick up from where it left off. Since US bond and stock markets will close early, investors are likely to refrain from making large bets ahead of the weekend. 

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the four-hour chart stays slightly below 70, suggesting that the pair could have a hard time gathering bullish momentum unless it makes a technical correction. Nevertheless, the pair holds comfortably above the ascending trend line and a four-hour close above 1.2150 is likely to attract additional buyers, opening the door for an extended rally toward 1.2200 (psychological level, static level) and 1.2250 (static level).

On the downside, 1.2050 (static level) aligns as interim support before 1.2000 (ascending trend line, 20-period Simple Moving Average (SMA)). In case GBP/USD falls below the latter and starts using it as resistance, this could be seen as a significant bearish development. In that scenario, further losses toward 1.1930 (50-period SMA) could be witnessed.