Current dynamics

During the morning session, the GBP/USD pair retreats from the highs of November 13, updated at the end of last week, and is trading at 1.2686: the pound maintains neutral dynamics, allowing the US dollar to continue to hold the leading position in the asset.

On Friday, the Bank of England published a report on financial stability, which reflected the key theses for the coming economic period: members of the Financial Policy Committee noted the stability of the banking system, in particular, stress tests of national credit institutions confirmed their sufficient capitalization and high level of liquidity, and geopolitical factors and the growth of the level of public debt were named among the key risks. A positive result of the current monetary policy was the achievement of intermediate inflation targets, which allows for a reduction in interest rates in the short term, as well as relative stability in the labor market. Today at 11:30 (GMT 2), investors will pay attention to the business activity statistics, calculated on the basis of a survey of purchasing and supply managers of leading national enterprises and assessing their attitude to the current economic situation and the prospects for its further development: according to forecasts, in November the indicator in the manufacturing sector will remain at 48.6 points.

The US dollar is offsetting the negative dynamics of the end of last week, trading at 106.20 in the USDX. Analysts expect the manufacturing PMI to increase from 48.5 to 48.8 in November, and the Institute for Supply Management (ISM) PMI to increase from 46.5 to 47.7, while the ISM PMI could accelerate from 54.8 to 55.2, supporting the national currency.

Support and resistance levels

On the daily chart, the trading instrument is correcting below the resistance line of the descending channel with dynamic boundaries of 1.2750–1.2550.

Technical indicators maintain a sell signal: fast EMAs on the Alligator indicator are moving away from the signal line, and the AO histogram is forming correction bars in the sell zone.

Resistance levels: 1.2730, 1.2890.

Support levels: 1.2640, 1.2490.

Trading scenarios

Short positions can be opened after the price declines and consolidates below 1.2640 with a target of 1.2490. Stop loss is 1.2700. Implementation period: 7 days or more.

Long positions can be opened after the price rises and consolidates above 1.2730 with a target of 1.2890. Stop loss is 1.2680.