Current trend

The pound is losing ground in the GBP/USD pair, returning to the “bearish” trend after the correction last Friday, when the currency was supported by strong data on the UK Q2 gross domestic product (GDP).

Thus, the June economic recovery accelerated by 0.5% against the fall of 0.1% last month, while analysts expected a value of 0.2%. The indicator added 0.2% QoQ with the forecast on the continuation of zero dynamics and 0.4% YoY instead of the expected 0.2%, mainly due to stable consumption and growth in production volumes. Experts note that the current GDP growth will allow the Bank of England to continue adjusting the interest rate to strengthen the fight against high inflation since the risks of the national economy going into recession have noticeably decreased. The pound was suppoerted by the June data on industrial production: the indicator rose by 1.8% MoM against preliminary estimates of 0.1% and by 1.8% YoY against the forecast of –1.1%.

During the week, British investors will follow the report on the labor market for June and July. On Wednesday, they will focuse on consumer inflation: current forecasts suggest a correction from 7.9% to 6.8% YoY and –0.5% MoM after rising 0.1% in June. In turn, in the US, retail sales will be released, where, according to preliminary estimates, an increase of from 0.2% to 0.4% MoM, as well as the publication of the minutes of the July meeting of the Federal Open Market Committee of the Federal Reserve United States (FOMC), which may contain the views of the members of the regulator on the current state of the American economy, as well as hints of further actions to slow inflation and restore macroeconomic indicators in the face of global geopolitical tensions.

Support and resistance

On the daily chart, Bollinger bands show a moderate decline: the price range is narrowing, reflecting the ambiguous nature of trading in the short term. MACD maintains a relatively strong sell signal, lying below the signal line. Stochastic shows a more confident decline but is close to the lows, indicating that the pound may become oversold in the ultra-short term.

Resistance levels: 1.2690, 1.2747, 1.2800, 1.2850.

Support levels: 1.2650, 1.2600, 1.2550, 1.2500.

Trading tips

Short positions may be opened after a confident breakdown of 1.2650 with the target at 1.2550. Stop loss – 1.2700. Implementation period: 1–2 days.

Long positions may be opened after a rebound from 1.2650 and a breakout of 1.2690 with the target at 1.2800. Stop loss – 1.2650.