Current trend

The GBP/USD pair is developing the upward impulse formed at the end of the last trading week, when it retreated from the local lows of July 2. Currently, the quotes are trading at 1.2763.

On Wednesday at 08:00 (GMT 2), July data on UK inflation is due. Analysts predict the consumer price index will adjust from 2.0% to 2.3% YoY and consolidate at 0.1% MoM. However, if the core value decreases from 1.9% YoY and from 0.2% MoM, it will support the pound. In turn, the gross domestic product (GDP) may fall from 0.7% to 0.5% QoQ and from 0.4% to 0.1% MoM, acting as a driver for the correction of the June trade balance from –17.92B pounds to –16.70B pounds.

Tomorrow, investors will focus on the national labor market statistics. At 08:00 (GMT 2), the claimant count for July is due, which may decrease from 32.3K to 14.5K, while the average wage excluding bonuses may increase from 4.4% to 4.5%, and the unemployment rate for the previous three-month period – from 4.4% to 4.5%. If the forecasts come true, the GBP/USD pair may continue its outgoing movement to the 1.2830 area and higher.

Meanwhile, the American dollar is falling. According to the Chicago Mercantile Exchange (CME) FedWatch Instrument, in September, US Fed officials will cut the interest rate by 25 basis points with a probability of 53.5%, and 46.5% are counting on an adjustment of –50 basis points, which puts pressure on the national currency, which will continue until the meeting on September 18. On Thursday at 14:30 (GMT 2), the July data on the US producer price index is due. It records the change in the cost of goods at the wholesale level and is a key indicator for the US Fed in determining further monetary policy. The indicator may stay at 0.2% MoM and fall from 2.6% to 2.3% YoY, while the core indicator may change from 3.0% to 2.5% YoY and from 0.4% to 0.2% MoM, confirming the confident pace of recovery of the national economy.

Support and resistance

The long-term trend remains upward. Within the correction from mid-July to early August, the trading instrument fell to the support level of 1.2680, where it began to grow to the region of 1.2830 and to the July high of 1.3025. The medium-term trend remains upward: the key trend support area of ​​1.2740–1.2710 was held, and upon retesting it, it is worth considering long positions, with the targets of 1.2877 and 1.3044. In case of overcoming the area of ​​1.2740–1.2710 and consolidation below it, the trend will reverse downwards, with the target in zone 2 (1.2436–1.2406).

Resistance levels: 1.2830, 1.3025.

Support levels: 1.2680, 1.2617, 1.2525.

Trading tips

Long positions may be opened from 1.2680, with the target at 1.2830 and stop loss 1.2630. Implementation period: 9–12 days.

Short positions may be opened below 1.2630, with the target at 1.2525 and stop loss 1.2680.