FX.co ★ Analysis and forecast for GBP/USD on May 19, 2022

Despite the decline in consumer prices in the UK, at yesterday's trading, the pound sterling showed a downward trend in a pair with the US dollar. It's all the fault of the change in market sentiment and the technical picture, which we will move on to, but a little later. In the meantime, I will remind you once again about the factors that put pressure on the British currency. First of all, this is the monetary policy of the Bank of England, which, according to market participants, falls short of expectations and is still more of a "dovish" shade. Let me remind you that the market is based on the fact that the British Central Bank will raise the main interest rate to 2% by the end of this year. The second factor is the risks that Brexit entails. As you know, the United Kingdom unilaterally suspended the protocol on Northern Ireland, and this can cause very negative consequences in economic relations with the European Union. Now about the technical picture, which once again confirms that the "Briton" knows a lot about this.

Daily

As expected, the pair was still able to pull back to the most important psychological and technical level of 1.2500, where it was expected to meet strong resistance from sellers. I would like to draw your attention to the fact that it is here that the first pullback level of 23.6 Fibo passes, from the grid stretched to a decrease of 1.3642-1.2154. As a result of yesterday's decline, the pair returned to the level of 1.2410, the fate of which has become even more vague. The bulls on the pound have found support in the form of the Tenkan red line of the Ichimoku indicator and are trying to push off from it. While everything is thin, the growth is very timid. Nevertheless, during the day, the actions of the players to increase the exchange rate may become more active, which will allow GBP/USD to return above 1.2410 again and finish trading today above this mark. If the bears on this instrument continue to put pressure on the quote and trading ends under the red Tenkan line, most likely, a strong technical support level of 1.2155 will be tested for a breakdown once again. At the same time, I fully admit that if this happens, it will not happen today. Today, the formed candle and its closing price will be of particular importance.

H1

Looking at the hourly chart, you can see everything for yourself. After the pair corrected to the middle of the upward movement of 1.2154-1.2499, the pound is trying to turn north and resume growth. I recommend paying attention to the 1.2410 level and the simple moving average slightly above 50. If bearish candles appear on this or four-hour charts in the price zone 1.2400-1.2420, indicating the end of the rise, we try to sell with targets near 1.2365. Since 89 and 200 exponential moving averages are located right below this level, we have the right to count on their support and consider opening purchase deals. That's all for today, and tomorrow we will return to the consideration of the GBP/USD currency pair and see if our assumptions were justified.