Current trend

The GBP/USD pair is showing a slight decline, developing the "bearish" momentum formed at the beginning of the week. The instrument is testing the level of 1.2790 for a breakdown, but is not declining as actively, which is due to the weakening position of the American currency after a short-term growth against the backdrop of inflation data.

On Tuesday, March 12, February statistics were presented in the United States, which recorded an acceleration of the Consumer Price Index from 3.1% to 3.2% in annual terms and from 0.3% to 0.4% in monthly terms, thereby confirming analysts have doubts about the prospects for the policy of reducing the cost of borrowing by the US Federal Reserve this year, but markets are still counting on the first adjustment of monetary conditions during the June meeting. Now investors are guided by comments from the Chair of the regulator, Jerome Powell, who said last week that the moment of transition to "dovish" rhetoric is already close, and the February rise in inflation is considered a temporary fluctuation, not a trend.

Data from the UK published the day before did not provide noticeable support for the instrument: Industrial Production volumes in January decreased by 0.2% after an increase of 0.6% in the previous month, while analysts expected zero dynamics, and in annual terms the indicator adjusted from 0.6% to 0.5% with a forecast of 0.7%. Gross Domestic Product (GDP) contracted 0.3% year-on-year in January but increased 0.2% month-on-month amid rising domestic trade and construction, reflecting the likelihood that the country's economy will soon emerge from recession, but the rate of growth remains insufficient. Overall, current conditions in the UK economy are in line with the Bank of England's monetary policy adjustment to begin, as the labor market and manufacturing are under pressure, economic growth has slowed down and inflation is showing signs of a steady decline, but experts do not expect decisive action from the regulator until May or June.

Support and resistance

Bollinger Bands in D1 chart show moderate growth. The price range is changing slightly, but remains rather spacious for the current level of activity in the market. MACD is declining keeping a weak sell signal (located below the signal line). Stochastic shows a more confident decline, but is quickly approaching its lows, which indicates the risks of the pound being oversold in the ultra-short term.

Resistance levels: 1.2810, 1.2850, 1.2900, 1.2963.

Support levels: 1.2771, 1.2734, 1.2700, 1.2650.

Trading tips

Short positions may be opened after a breakdown of 1.2771 with the target at 1.2700. Stop-loss — 1.2810. Implementation time: 2-3 days.

A rebound from 1.2771 as from support followed by a breakout of 1.2810 may become a signal for opening new long positions with the target at 1.2900. Stop-loss — 1.2771.