Current trend

The GBP/USD pair is trading with a slight upward trend, testing a strong resistance level of 1.3100. The focus of investors today is a block of macroeconomic statistics from the UK.

Gross Domestic Product (GDP) in July again showed zero dynamics, while analysts expected an acceleration to 0.2%. In turn, Industrial Production volumes in monthly terms decreased by 0.8% after increasing by a similar amount in the previous month, while experts expected 0.3%, and in annual terms the indicator fell from –1.4% to –1.2% with preliminary estimates of –0.2%. Manufacturing Production also showed negative dynamics at the level of –1.0% on a monthly basis and –1.3% on an annual basis.

In addition, investors are still assessing the data on the British labor market published the day before: Employment Change in July increased sharply from 97.0 thousand to 265.0 thousand, Claimant Count Change in August fell from 102.3 thousand to 23.7 thousand with a forecast of 95.5 thousand, the Unemployment Rate, as expected, adjusted from 4.2% to 4.1%, and the Average Earnings Including Bonus slowed down sharply from 4.6% to 4.0% with expectations of 4.1%. Wage increases continue to outpace consumer price growth by more than twice, raising concerns that this could act as a catalyst for faster inflation. Financial markets are pricing in a 72.0% chance that the Bank of England will keep borrowing costs on hold this month, with a 25-basis-point cut likely at its November and December meetings. Much may depend on the August CPI data, which will hit the market the day before the Monetary Policy Committee meeting.

In the US today at 14:30 (GMT 2), the August inflation statistics will be presented: analysts expect a slowdown in the annual dynamics from 2.9% to 2.6% and the previous growth of 0.2% in monthly terms. The Core CPI is expected to remain unchanged at 3.2% and 0.2%, respectively.

Support and resistance

On the daily chart, Bollinger Bands are gradually reversing into a descending plane. The price range is expanding, pointing at intensification of the general volatility level in recent days. MACD is falling, keeping a relatively strong sell signal (the histogram is below the signal line). Stochastic, having dropped below the level of "20", reverses into a horizontal plane, reacting to the emergence of upward dynamics during the morning session.

Resistance levels: 1.3100, 1.3150, 1.3200, 1.3250.

Support levels: 1.3050, 1.3000, 1.2948, 1.2900.

Trading tips

Long positions can be opened after a breakout of 1.3100 with the target of 1.3200. Stop-loss — 1.3050. Implementation time: 1-2 days.

A rebound from 1.3100 as from resistance, followed by a breakdown of 1.3050 may become a signal for opening of new short positions with the target at 1.2948. Stop-loss — 1.3100.