Current trend

The GBP/USD pair is retreating from the year’s highs against the positive trend of the US currency, trading at 1.3044.

The growth rate of the British economy in July was much lower than forecasts, preventing the pound from reversing the trend upwards. The gross domestic product (GDP) did not change MoM, although experts assumed an increase of 0.2% and increased from 0.7% to 1.2% YoY relative to expectations of 1.4%. The national economy is under pressure from the poor dynamics of industrial production: in July, it changed from 0.8% to –0.8% MoM and from –1.4% to –1.2% YoY. The estimate of the August GDP growth from the National Institute of Economics and Social Research (NIESR) was revised from 0.5% to 0.3% QoQ. Investors react to labor market data: the July employment increased from 97.0K to 265.0K, and the August claimant count fell from 102.3K to 23.7K with a forecast of 95.5K. The unemployment rate, as expected, adjusted from 4.2% to 4.1%, and the average wage, taking into account bonuses, slowed from 4.6% to 4.0% against expectations of 4.1%. The statistics allow the Bank of England to continue easing monetary policy, and at the meeting on September 19, the interest rate may change by –25 basis points.

The American dollar is trading at 101.70 in USDX. Investors reacted positively to yesterday’s inflation report, as based on it, US Fed officials may decide to reduce the cost of borrowing more actively at a meeting on September 18. The August consumer price index increased by 0.2% MoM, meeting forecasts, and decreased from 2.9% to 2.5% YoY, the lowest since March 2021, when inflation was just beginning to rise.

Support and resistance

On the daily chart, the trading instrument moves away from the resistance line of the Expanding formation pattern of 1.3260–1.2820.

Technical indicators weaken the buy signal: fast EMAs on the Alligator indicator are approaching the signal line, and the AO histogram forms corrective bars, falling in the buy zone.

Resistance levels: 1.3080, 1.3260.

Support levels: 1.3000, 1.2850.

Trading tips

Short positions may be opened after the price decrease and consolidation below 1.3000, with the target at 1.2850. Stop loss is 1.3080. Implementation period: 7 days or more.

Long positions may be opened after the price rises and strengthens above 1.3080, with the target at 1.3260. Stop loss is 1.3000.