GBP/USD Forecast: GBP bulls could opt out due to BOE's wait-and-watch approach

GBP/USD Forecast: GBP bulls could opt out due to BOE’s wait-and-watch approach

The GBP/USD pair recovered losses on Tuesday to hit an intraday high of 1.4971, whereby the pair ran to sellers. The subsequent losses were capped at 1.4912 levels earlier today. The pair now trades at 1.4937 levels with traders eyeing the Bank of England (BOE) minutes from the April 9th meeting. This will be the last set of comments from the BOE members before the elections. The minutes are widely expected to show a unanimous 9-0 vote in favor of keeping monetary policy unchanged. If the number of policymakers in favor of hiking rates sooner than later increases, the pair could make a fresh attempt at 1.5 levels. However, with GBP at multi-year highs against the EUR, there is a very little probability that policy makers would favor a rate hike this year. The last month’s PMI reports in the UK showed growing concern among industrials regarding the strength in the GBP against the EUR. Thus, it is more likely that the tone has turned more dovish, with policy makers increasingly favoring a wait-and-watch approach. In such a case, the GBP bulls could opt out, thereby taking the pair below 1.4865 levels.

As per technical charts, the 50-DMA located at 1.4962 is likely to act as a strong resistance, since the gains are being capped at the same for two consecutive sessions. Additionally, the 5-DMA at 1.4939 is proving to be a stiff resistance at the moment. Sellers are likely to chip in anywhere till the 50-DMA, a break above which can open doors for an intraday rally to 1.5 levels. On the other hand, failure to sustain above 1.4936 (23.6% Fib retracement of 1.4564-1.5051) could open doors for a re-test of 1.4865 levels. The overall outlook stays bearish till the pair does not confirm a daily close above 1.5 levels.

EUR/USD Analysis: Greece continues to dominate sentiment

Amid the absence of a major market moving fundamental report, the EUR/USD pair is likely to take cues from the Greek issue. The EUR recovered losses in the previous session after the Greek finance minister Varoufakis said there are clear signs that Greece, and its EU/IMF lenders are likely to reach a deal. However, Germany is likely to refuse releasing additional bailout funds without a credible reform plan. If Greece fails to secure a bailout, the IMF's May 12th payment and the ECB/IMF/Treasury Bill payments in June and July will be at risk. Such an event could weigh heavily on the EUR. Moreover, the uncertainty about the future is quite evident from the German Zew survey released on Tuesday, which showed the future expectations index declined for the first time in six months.

On the charts, the pair is currently stuck at its hourly 100-MA located at 1.0745, with the hourly RSI bullish at 54.58. A break above 1.0755 (50% Fib retr. of 1.0461-1.1050) and 1.0767 (5-DMA) could push the pair higher to 1.0824 levels. On the other hand, a break below 1.0686 (61.85 Fiib retr. Of 1.0461-1.1050) could drive the pair lower to 1.06 levels. Given the absence of a major market moving data, we could see the pair being restricted to a range of 1.0767-1.0686.