Current trend

The GBP/USD pair is trading higher, developing a weak corrective impetus formed at the end of last week, when the instrument managed to retreat from the local lows of July 11. The instrument is testing 1.2875 for a breakout, while traders are expecting new drivers to emerge.

Thus, today in the UK the June statistics on lending dynamics will be published: a reduction in the Net Lending to Individuals is predicted from 2.7 billion pounds to 2.2 billion pounds, and the Mortgage Approvals may be adjusted from 59.991 thousand to 60.0 thousand.

Pressure on the US currency is being exerted by the US inflation data released on Friday: the Core Personal Consumption Expenditure - Price Index accelerated from 0.1% to 0.2% in June, and in annual terms remained unchanged at 2.6%, while analysts had expected a slowdown to 2.5%. Five-year inflation expectations, according to calculations by the University of Michigan, increased in July from 2.9% to 3.0%. The current modest growth is unlikely to impact future monetary policy decisions by the US Federal Reserve, whose officials are already saying that relying solely on these figures would be wrong. The US regulator will hold a meeting this Wednesday, but analysts are confident that no harsh statements will be made. Of somewhat greater interest are the results of the meeting of representatives of the Bank of England, which will take place on Thursday, August 1. More and more experts are speaking out in favor of a possible reduction in borrowing costs by 25 basis points to 5.00% against the backdrop of a slowdown in inflation risks. A Reuters poll found that 80.0% of respondents, or 49 out of 60 economists, expect the UK regulator to cut interest rates in August: the rate has been held at a more than 15-year high of 5.25% for 14 consecutive hikes. However, before the publication of inflation data, 97.0% of respondents expected the value to be adjusted.

Support and resistance

Bollinger Bands in the daily chart show quite active growth. The price range is narrowing, being spacious enough for the current activity level in the market. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic, having approached its lows, reversed into a horizontal plane, indicating the risks of oversold pound in the ultra-short term.

Resistance levels: 1.2900, 1.2948, 1.3000, 1.3050.

Support levels: 1.2860, 1.2817, 1.2776, 1.2730.

Trading tips

Short positions may be opened after a breakdown of 1.2860 with the target at 1.2776. Stop-loss — 1.2900. Implementation time: 2-3 days.

The development of the "bullish" trend with the breakout of 1.2900 may become a signal for opening long positions with the target of 1.3000. Stop-loss — 1.2860.