Current trend

The GBP/USD pair is trying to regain positions after the correction and is currently holding around 1.3163.

The pound is supported by positive August business activity data: the Manufacturing PMI remained at 52.5 points, the Services PMI adjusted from 52.5 points to 53.7 points, the Construction PMI— from 55.3 points to 53.6 points, while the Composite PMI grew from 52.8 points to 53.8 points against the background of a decline in inflation in July to 2.2%, increasing the likelihood of a more cautious approach in easing monetary policy by the Bank of England. In addition, recent surveys conducted by officials have recorded a forecast of further wage increases supporting the risks of renewed consumer price growth. In this situation, most experts expect that the British regulator will not make a new reduction in the key rate before November.

On the contrary, investors expect the start of the monetary policy easing cycle from the US Federal Reserve in September, which puts pressure on the dollar. If tomorrow's publication of August labor market data again demonstrates low employment growth and the persistence of unemployment at the current level or its increase, the regulator will have grounds to reduce the cost of borrowing by 50 basis points at once. Otherwise, the US Federal Reserve may limit itself to an adjustment of only ˗25 basis points.

Thus, the continuation of the upward dynamics of the GBP/USD pair in the medium term seems to be the most likely scenario.

Support and resistance

Currently, the pair is close to 1.3183 (Murrey level [8/8]), consolidation above which will ensure continued growth towards the targets of 1.3305 (Murrey level [ 2/8]), 1.3427 (Murrey level [ 2/8], W1). The key for the "bears" is 1.3061 (Murrey level [6/8]), supported by the central line of Bollinger Bands, with a breakdown of which downward dynamics can resume to the area of 1.2939 (Murrey level [4/8]) and 1.2878 (Murrey level [3/8], 61.8% Fibonacci retracement), but this scenario is still seen as less likely.

Technical indicators show the continuation of the uptrend: Bollinger Bands and Stochastic are directed upwards, MACD is stable in the positive zone.

Resistance levels: 1.3183, 1.3305, 1.3427.

Support levels: 1.3061, 1.2939, 1.2878.

Trading tips

Long positions can be opened above 1.3183 with targets of 1.3305, 1.3427 and a stop-loss around 1.3100. Implementation period: 5–7 days.

Short positions should be opened below the level of 1.3061 with targets of 1.2939, 1.2878 and a stop-loss near 1.3145.