GBP/USD: THE BANK OF ENGLAND KEPT THE INTEREST RATE AT 5.25%

Current trend

During the Asian session, the GBP/USD pair developed a strong downward momentum, holding around 1.2628 after the publication of business activity statistics and the results of the Bank of England’s monetary policy meeting.

Yesterday, regulator officials expectedly decided to keep interest rates at 5.25%, with only one board member voting to cut borrowing costs. The accompanying statement noted that inflation pressures are weakening, as are wage growth rates remaining well above target levels, creating additional risks for the economy if the transition to a “dovish” course is too rapid. The department’s forecasts have not changed: the Q2 consumer price index may fall below 2.0%, after which moderate growth is possible. Meanwhile, in March, the service PMI adjusted from 53.8 points to 53.4 points, the manufacturing PMI – from 47.5 points to 49.9 points, and the composite PMI – from 53.0 points to 52.9 points.

The American dollar is trading at 103.80 in the USDX, supported by macroeconomic statistics. Initial jobless claims decreased from 212.0K to 210.0K, and the total claims amounted to 1.807M, slightly higher than 1.803M previously. In addition, February existing home sales increased by 9.5% from 4.00M to 4.38M.

Support and resistance

On the daily chart, the trading instrument is correcting towards the support line of the ascending channel 1.2900–1.2550.

Technical indicators are ready to issue a sell signal: fast EMAs on the Alligator indicator are approaching the signal line, and the AO histogram is forming downward bars above the transition level.

Resistance levels: 1.2700, 1.2860.

Support levels: 1.2600, 1.2500.

Trading tips

Short positions may be opened after the price declines and consolidates below 1.2600, with the target at 1.2500. Stop loss – 1.2650. Implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 1.2700, with the target at 1.2860. Stop loss – 1.2650.