GBP/USD Forecast: Eyeing Descending Trend-channel Resistance, Focus On BoE Decision

The GBP/USD pair turned out to be one of the main beneficiaries of the overnight US Dollar retracement on Monday. The pair extended its recovery move from the 100-day SMA support, tested on Friday, and reclaimed the 1.3200 handle amid ongoing speculation that the US President Donald Trump is likely to pick Jerome Powell to replace the current Fed Chair Janet Yellen. The pair, however, lacked any strong follow-through momentum beyond the 1.3200 handle as investors wait for this week's key event risks — FOMC, BoE and NFP — before initiating fresh positions. 

The key focus would be on the BoE meeting on Thursday, where the central bank would decide on whether to raise interest rates for the firm time in a decade, which would eventually drive the British Pound in the near-term. Meanwhile, the Fed would announce its monetary policy decision on Wednesday and the keenly watched NFP report is scheduled for release on Friday. 

In absence of any important UK economic data, the pair remains at the mercy of USD price dynamics, with traders taking cues from today's release of Employment Cost Index, Chicago PMI and Conference Board's Consumer Confidence Index. 

Technically, the pair last week rebounded from an important confluence support, comprising of the 100-day SMA and a short-term descending trend-channel formation on the 4-hour chart. Hence, some follow-through momentum beyond the 1.3200 handle seems more likely to get extended toward the trend-channel resistance, currently near the 1.3260-65 region, which if cleared would negate any near-term bearish bias and pave way for additional near-term up-move for the major. 

On the flip side, any pull-back from higher levels now seems to find immediate support near the 1.3160 horizontal level, which if broken would turn the pair vulnerable to weaken back below the 1.3100 handle and head toward retesting the trend-channel support near the 1.3060-55 region, also nearing the 100-day SMA.