Home Forex Analysis And Forecasts GBP/USD Forecast: Eyes 1.5270, possible inverted head and shoulder

GBP/USD Forecast: Eyes 1.5270, possible inverted head and shoulder

The GBP/USD pair rose to a high of 1.5322 on Thursday and extended gains to its 200-DMA at 1.5335 in Asia today. A slightly weaker than expected US Q3 GDP print led to a spike in the GBP/USD pair. Moreover, the pair repeatedly found support at 1.5248 (50% of Apr-June rally) and eventually made its way higher during the NY session.

Focus on GBP crosses and US data

The GBP/JPY and EUR/GBP cross could influence the cable today. The GBP/JPY pair dipped to a low of 184.30 after the Bank of Japan kept the policy unchanged, however, the pair made its way back up ahead of Kuroda’s comments. In case Kuroda points to more easing ahead, the GBP/JPY pair could rise towards 186.40-186.50, thereby pushing the cable back to its 200-DMA at 1.5335. Later in the day, an upbeat Eurozone preliminary Oct CPI figure could push up EUR/GBP cross and add to the bearish pressure on the GBP/USD pair.

US personal spending report

The Fed policy statement released earlier this week talked up the December rate hike bets, however, by no means a rate hike is a done deal and the bank stays data dependent. The US Q3 preliminary GDP (subject to revisions ahead) confirmed the Fed’s view that the economy continues to expand at a moderate pace. The policy statement also sounded upbeat on household spending. But, the data due later today is likely to show the personal spending in October slowed to 0.2% and the personal income growth also dropped to 0.2%. A weaker-than-expected personal spending figure could undo the post-Fed optimism and trigger USD weakness ahead of monthly closing.

Technicals – inverted head and shoulder on hourly chart?

Sterling was rejected at its 200-DMA at 1.5335 earlier today, but remains resilient around 1.5320. The hourly chart shows prices could fall back to 1.5270 followed by a revival, leading to an inverted head and shoulder formation with neckline resistance around 1.5335. A break above 1.5335 (confluence with 200-DMA) could open the doors for 1.5420. However, a break below 1.5270 may lead to a re-test of 1.5247 levels.

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