- Despite the prevailing greenback selling pressure, the GBP/USD pair regained momentum on Monday.
- The USD is being weighed down by the dwindling chances of additional aggressive Fed rate rises.
- The Bank of England is pondering the largest rate hike in 27 years.
During the European session, the GBP/USD forecast remains bullish as the cable goes above 1.22500. At the time of writing, the pair is trading at 1.22470.
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A shaky start for the greenback
On Monday, the greenback is expected to retest recent lows in the 105.60 range.
The US dollar is approaching its lowest level since July 5, a crucial factor supporting the GBP/USD.
Market players continue to reduce their expectations for the Federal Reserve to raise interest rates more aggressively amid concerns about an economic slump.
To a greater extent, this overshadows Friday’s better US Personal Consumption Expenditures (PCE) and weighs on the greenback.
A cloudy Sterling
On the other hand, the British pound is supported by growing odds on the Bank of England, raising interest rates by 50 basis points.
When the Bank of England meets this week, officials will aim to accelerate monetary tightening, following the trend set by the European Central Bank and the US Federal Reserve.
GBP/USD key events to watch
The publication of the ISM Manufacturing PMI, which may add some trading momentum to the major, kicks off a pretty busy week for GBP/USD.
Earlier, we had the UK Manufacturing PMI.
What’s next to watch for GBP/USD forecast?
The current upward advance in the global markets has peaked as recession worries mount. This, combined with a minor rise in US Treasury bond rates, could help limit the USD’s downside and act as a headwind for the major, at least for the time being.
GBP/USD technical forecast: Bulls aiming higher
GBP/USD has gained 0.50% so far. The pair is above its 100-day moving average on the 4H chart, and the RSI is around 70.
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GBP/USD is now hitting the 1.22450 level. A fall below 1.21744 will bring the pair towards the 1.2063 support level. If the pair dips below this level again, it will move to the next support level at 1.1963.
On the upside, the pair can reach the next resistance level, around 1.2270. A break over 1.2346 will pave the door for a test of the following resistance level of 1.2445.
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