Current trend

The GBP/USD pair shows a weak growth, trying to recover from a steady decline during the last trading sessions. At the same time, despite the corrective sentiment, the instrument is preparing to end the week with a rather noticeable decrease, having updated the local lows of July 10.

The pound may be supported by June data on Retail Sales from the UK, published today. The indicator added 0.7% in monthly terms after rising by 0.1% in the previous month (revised from 0.3%), while analysts expected 0.2%, and in annual terms, the negative dynamics slowed down from -2.3% to -1.0%. In turn, the Consumer Confidence Index from the analytical portal Gfk Group in July fell from -24.0 points to -30.0 points, while the forecast was -26.0 points.

In addition, the pressure on the British currency increased with the publication of inflation statistics on Wednesday. The annual growth rate of consumer prices fell in June from 8.7% to 7.9%, while experts expected 8.2%, and in monthly terms, the figure slowed down from 0.7% to 0.1% against expectations of 0.4%. Against this background, some traders have revised their forecasts for further tightening of monetary policy by the Bank of England, but the interest rate is likely to rise at the next meetings. On June 22, the British regulator corrected the rate by 50 basis points, while on August 3 it is expected to increase it by 25 basis points to 5.25%. In turn, the US Federal Reserve will meet next week and with a probability of more than 90.0% will increase the cost of borrowing by 25 basis points to 5.50%.

Support and resistance

On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic keeps a confident downward direction but is already approaching its lows, which indicates the risks of oversold pound in the ultra-short term.

Resistance levels: 1.2900, 1.2963, 1.3000, 1.3050.

Support levels: 1.2838, 1.2800, 1.2747, 1.2690.

Trading tips

Long positions can be opened after a breakout of 1.2900 with the target of 1.3000. Stop-loss — 1.2838. Implementation time: 2-3 days.

A rebound from 1.2900 as from resistance, followed by a breakdown of 1.2838 may become a signal for opening of new short positions with the target at 1.2747. Stop-loss — 1.2900.