Current trend

The GBP/USD pair is trading below 1.3000, maintaining a negative trend after the publication of inflation data last week.

Thus, the September consumer price index fell from 2.2% to 1.7% YoY against the forecast of 1.9% and from 0.3% to 0.0% MoM against 0.1%. As a result, the Bank of England officials may adjust the interest rate by –25 basis points twice, in November and December. In addition, the August volume of employment in three-month terms increased from 265.0K to 373.0K, exceeding expectations of 250.0K, and unemployment slowed from 4.1% to 4.0%, less than the calculations of 4.1%. Thus, the UK labor market may be starting to overheat, contributing to expectations of lower borrowing costs and putting pressure on the pound.

The American dollar has been strengthening since the beginning of October, almost without correction, amid the expected slowdown in the pace of easing by the US Fed at its meeting on November 7 from 50 basis points to 25 basis points. According to the Chicago Mercantile Exchange (CME) FedWatch Instrument, the probability of keeping the interest rate at 5.00% is 11.0%. Tomorrow at 15:45 (GMT 2), investors will focus on the S&P Global October PMI. According to forecasts, the indicator will fall from 55.2% to 55.0%. On Friday at 14:30 (GMT 2), the statistics on durable goods orders are due: the September value may slow from 0.0% to –1.1%, which may negatively affect the national currency.

Support and resistance

The long-term trend is upward. However, within the correction, the trading instrument has broken 1.3000. After consolidation below, it may reach the level of 1.2857. After its breakout, the trend may reverse downwards, with the target at 1.2680. If the price returns to 1.3000, growth to 1.3400 is likely.

The medium-term trend reversed downwards last week when the quotes broke the target zone of 1.3130–1.3099 and headed to zone 2 (1.2826–1.2795). The trend line is shifting to the 1.3279–1.3248 area, and in case of a correction, short positions with the target at 1.2947 are relevant.

Resistance levels: 1.3055, 1.3400.

Support levels: 1.2857, 1.2680, 1.2525.

Trading tips

Long positions may be opened above 1.3055, with the target at 1.3400 and stop loss 1.2943. Implementation period: 9–12 days.

Short positions may be opened below 1.2857, with the target at 1.2680 and stop loss 1.2917.