03.05.202211:25 Forex Analysis & Reviews: Analysis and forecast for GBP/USD on May 3, 2022

At yesterday's trading, the pound/dollar currency pair was in solidarity and essentially repeated the price dynamics of the euro/dollar. However, it is necessary to understand that yesterday was the first trading day during which the market often swings, and the most important events of this super busy trading week are still ahead. Let me remind you once again that tomorrow the US Federal Reserve System (FRS) will make its decision on the interest rate, after which a press conference will be held by Fed Chairman Jerome Powell, and the next day the Bank of England will publish its verdict on the rate. It is expected that both Central Banks will raise their rates - the Fed by 50 basis points, and the Bank of England by 25 bps. Nevertheless, as already noted in previous reviews on GBP/USD, the Bank of England will adhere to more "dovish" rhetoric, which will be facilitated by a weaker economic situation in the UK than in the USA.

However, inflation continuing its growth on the shores of the UK may push the British Central Bank to a tougher tone. Meanwhile, do not forget about the likelihood of stagflation, which puts the Bank of England in an extremely ambiguous and contradictory position. Well, the British regulator will have to analyze the current economic situation once again and choose the further direction in its monetary policy. In my own opinion, the BoE will continue its fight against high inflation by raising rates, although this will happen at a much more restrained pace than their colleagues from the Fed. If so, then the US dollar has every chance to continue to steer in a pair with the British pound. In the meantime, pay attention to the price charts.

Daily

After Friday's corrective growth to 1.2613, the pound retreated and closed trading on April 29 at 1.2570, after which it can be concluded that the market is not yet eager to trade GBP/USD above 1.2600. The course of yesterday's trading, with the closing price below the most important psychological level of 1.2500, confirmed this assumption. Nevertheless, it is worth noting that in the current situation, trading on the pound/dollar pair takes place in the range of 1.2613-1.2410, the exit from which can determine the immediate prospects of this trading instrument. A break in the resistance of 1.2613 will send the pair to the 1.2700 mark, the passage of which will ensure that the quote meets the red line of the Tenkan Ichimoku indicator, which lies at the strong technical level of 1.2750. A breakdown of support at 1.2410 will create prerequisites for further downward dynamics, the goals of which will be the levels of 1.2360, 1.2300 and 1.2250.

H1

At the moment, the GBP/USD pair is trading under the blue 50 MA and the black 89 EMA. However, two highlighted hourly candles indicate the willingness of bulls to return the pound quote above the indicated moves. If this happens, then on the rollback to the broken 50 MA and 89 EMA, it is worth considering purchases with immediate goals in the area of 1.2585-1.2600. In case of unsuccessful attempts to break up the marked moving averages and the appearance of bearish candlestick analysis patterns under them, I recommend trying to sell with the nearest targets in the area of 1.2500-1.2470. Due to the most important events related to the decisions on the rates of both Central Banks, I do not recommend putting up more significant profits. At least not yet.