FX.co ★ GBP/USD outlook for February 14, 2023

Earlier this month, the Bank of England raised the interest rate by 0.50% at once, bringing it to a historic high of 4.0%. But despite this, the pound could not benefit much from this decision. As we noted in our recent review, economists predict an imminent economic downturn and recession for the UK. In this regard, they believe that the Bank of England next year, and maybe earlier, will go for policy easing in order to support the economy, despite high inflation.

Nevertheless, market participants will receive additional information regarding the prospects for the monetary policy of the Bank of England tomorrow on the release of the latest UK inflation data at 07:00 (GMT). And today, they will follow the release of the U.S. Bureau of Labor Statistics' report at 13:30 (GMT) with data on inflation in the country for January.

Last month, against the backdrop of the weakness of the U.S. dollar, the GBP/USD pair managed to correct from the local low of 1.1842 and reach 1.2440.

After the completion of the upward correction that began at the end of September, the GBP/USD fell into a "drift" since December last year, trading within a relatively wide (600 points) range, between the levels of 1.2440 and 1.1840 and near the medium-term balance line, expressed in this case by the important support level 1.2140 (200 EMA on the daily chart). To break out of this range, the GBP/USD pair needs new strong drivers. And this may be possible amid the the inflation releases today and tomorrow.

In case of further growth and after the breakdown of the important resistance level 1.2230 (50 EMA on the weekly chart), GBP/USD will head towards the key resistance levels 1.2730 (144 EMA on the weekly chart), 1.2880 (200 EMA on the weekly chart).

In an alternative scenario, it is logical to assume a rebound from the 1.2230 resistance level and the resumption of decline. The breakdown of the 1.2055 support level will strengthen the downward dynamics of GBP/USD, and the breakdown of the local support level 1.1842 (2023 lows) will confirm the resumption of the global downward trend of the GBP/USD.

Support levels: 1.2140, 1.2100, 1.2055, 1.2000, 1.1842, 1.1160, 1.0940

Resistance levels: 1.2200, 1.2230, 1.2300, 1.2400, 1.2440, 1.2500, 1.2600, 1.2730, 1.2800, 1.2880

Trading scenarios

Sell Stop 1.2120. Stop-Loss 1.2240. Take-Profit 1.2100, 1.2055, 1.2000, 1.1842, 1.1160, 1.0940

Buy Stop 1.2240.Stop-Loss 1.2120. Take-Profit 1.2300, 1.2400, 1.2440, 1.2500, 1.2600, 1.2730, 1.2800, 1.2880