Published on May 22, 2023

Daily Analysis For GBP/USD 22-05-2023

GBP/USD Analysis

Economic Events and Scenario for GBP/USD

Economic Events: -

GMT	Event	Impact	Currency
00:50	(Japan) Machinery Orders YoY	Medium	JPY
00:50	(Japan) Machinery Orders MoM	Medium	JPY
01:00	(Canada) Victoria Day	None	CAD
01:00	(Montenegro) Independence Day	None	EUR
02:15	(China) Loan Prime Rate 1Y	Medium	CNY
02:15	(China) Loan Prime Rate 5Y	Medium	CNY
05:30	(Netherlands) Consumer Confidence	Medium	EUR
06:00	(Estonia) PPI YoY	Low	EUR
06:00	(Estonia) PPI MoM	Low	EUR
07:30	(Switzerland) Industrial Production YoY	Medium	CHF
08:00	(Slovakia) Current Account	Low	EUR
09:00	(Greece) Current Account	Low	EUR
09:00	(Australia) Myfxbook AUDUSD Sentiment	Medium	AUD
09:00	(Switzerland) Myfxbook USDCHF Sentiment	Medium	CHF
09:00	(Japan) Myfxbook USDJPY Sentiment	Medium	JPY
09:00	(European Union) Myfxbook EURUSD Sentiment	Medium	EUR
09:00	(United Kingdom) Myfxbook GBPUSD Sentiment	Medium	GBP
09:00	(Canada) Myfxbook USDCAD Sentiment	Medium	CAD
09:00	(New Zealand) Myfxbook NZDUSD Sentiment	Medium	NZD
10:00	(Belgium) Consumer Confidence	Low	EUR
10:00	(Euro Area) Construction Output YoY	Low	EUR
10:45	(European Union) EU Bond Auction	Low	EUR
11:00	(Ireland) Wholesale Prices MoM	Low	EUR
11:00	(Ireland) Wholesale Prices YoY	Low	EUR
11:00	(Luxembourg) Unemployment Rate	Low	EUR
11:30	(Portugal) Current Account	Low	EUR
13:00	(Kosovo) Balance of Trade	Low	EUR
13:30	(United States) Fed Bullard Speech	Medium	USD
14:00	(France) 3-Month BTF Auction	Low	EUR
14:00	(France) 12-Month BTF Auction	Low	EUR
14:00	(France) 6-Month BTF Auction	Low	EUR
15:00	(Euro Area) Consumer Confidence	Medium	EUR
15:50	(United States) Fed Barkin Speech	Medium	USD
15:50	(United States) Fed Bostic Speech	Medium	USD
16:30	(United States) 3-Month Bill Auction	Low	USD
16:30	(United States) 6-Month Bill Auction	Low	USD
20:00	(El Salvador) Balance of Trade	Low	USD

Today's Scenario: - The GBP/USD pair is currently trading above 1.2450 following a recovery and shows potential for further gains. This is driven by the Federal Reserve (Fed) considering a pause in their tightening of monetary policy due to tight credit conditions among US regional banks. Concerns of a potential default by the US Treasury have caused the US Dollar Index (DXY) to hover near its daily low around 103.00.

While S&P 500 futures have managed to recover some of the losses seen in early Asian trading, caution still prevails in the market. US equities ended the week in negative territory as President Joe Biden rejected partisan terms proposed by House of Representatives Kevin McCarthy, who had linked approval for raising the US debt ceiling to specific conditions.

Buy Scenario: - On the buying side of GBP/USD, a recovery above the May 9 high at 1.2640 would propel the currency pair towards the round-level resistance at 1.2700 and the high of April 26, 2022, at 1.2772. Till we do not advise to buy GBP/USD.

Sell Scenario: - GBP/USD experienced a significant drop after breaking below the upward-sloping trendline originating from the April 3 low at 1.2275 on the four-hour chart. The currency pair has been consistently forming lower highs, indicating the strength of the US Dollar bulls. Potential support is expected around the April 10 low at 1.2344.

The 50-period Exponential Moving Average (EMA) at 1.2486 is acting as a barrier for GBP/USD buyers, limiting their ability to push the price higher.

Meanwhile, the Relative Strength Index (RSI) (14) has not comfortably entered the bearish range of 20.00-40.00. If this occurs, it would further strengthen the US Dollar bulls.

If the pair declines below the May 19 low at 1.2390, it would provide additional strength to the US Dollar bulls and potentially drive GBP/USD towards the April 10 low at 1.2344, followed by the April 3 low at 1.2275. Till then we do not advise selling GBP/USD.

Support and Resistance Level: -