GBP/USD Forecast: Technical trading opportunities ahead of central bank meetings

GBP/USD has gone into a consolidation phase on Monday with trading conditions remaining thin due to the Early May holiday in the UK. Ahead of this week's highly-anticipated central bank meetings, the pair's fluctuations in the well-defined range could be seen as technical trading opportunities.

GBP/USD gained nearly 1% amid broad-based dollar weakness on Friday and snapped a six-day losing streak. The greenback, however, holds its ground early Monday amid a negative shift witnessed in risk mood and doesn't allow the pair to gain traction.

The global economic outlook continues to worsen with coronavirus-related restrictions in China weighing on the activity and escalating geopolitical tensions force investors to adopt a cautious stance. The US Dollar Index was last seen rising 0.2% on the day at 103.40.

Meanwhile, US stock index futures are up between 0.3% and 0.4% in the European session, suggesting that the dollar could lose its strength in case Wall Street's main indexes push higher in the second half of the day.

The US economic docket will feature the ISM Manufacturing PMI report for April later in the day and it would be surprising to see a significant market reaction to this data.

GBP/USD Technical Analysis

GBP/USD is moving sideways near 1.2570, where the Fibonacci 23.6% retracement of the latest downtrend is located, and faces first resistance at 1.2600 (psychological level). In case this level turns into support, the next recovery targets are located at 1.2660 (Fibonacci 38.2% retracement) and 1.2700 (psychological level, 50-period SMA on the four-hour chart).

On the downside, 1.2530 (20-period SMA) aligns as interim support ahead of 1.2500 (psychological level). A daily close below the latter could be seen as a bearish development and open the door for additional losses toward 1.2420 (static level).