Current trend

During the Asian session, the GBP/USD pair is recovering after an active decline at the beginning of this week, testing 1.2155 for a breakout against a correction in the American currency and strong British macroeconomic statistics.

UK Q2 gross domestic product (GDP) data released on Friday was 0.6% YoY, better than analysts’ expectations of 0.4%, and the previous figure was revised from 0.2% to 0.5%. The figure adjusted by 0.2% QoQ, justifying expert forecasts. In addition, the September composite PMI reached 48.5 points, higher than the estimated 46.8 points, and services PMI reached 49.3 points, exceeding preliminary estimates of 47.2 points. If the British economy continues to recover, it will avoid a recession, supporting investor sentiment and the GBP/USD pair, in addition, the asset will be positively affected by the Bank of England’s interest rate hike at its next meeting on November 2.

However, strong data on the US labor market, which will be published on Friday, may put pressure on the quotes: analysts expect that the change in nonfarm payrolls for September will amount to 163.0K. If the actual value exceeds it by 15.0–20.0K, the American dollar may strengthen, otherwise, it will begin a correction after record growth in August-September.

Support and resistance

The long-term trend is downwards, and within it, the price reached the support level of 1.2125 and overcame it. This week, an additional support level of 1.2050 formed, where the quotes began to grow, trying to consolidate above 1.2125, after which an upward correction with the target at 1.2370 will begin. The RSI (21) indicator was recently in the oversold zone but is now coming out. A Convergence signal, which indicates the possibility of corrective purchases, is observed.

The medium-term trend is downwards: after the breakdown of zone 2 (1.2342–1.2302), the price approached zone 3 (1.2006–1.1972) and began an upward correction, if it continues, the quotes may reach the area of key trend resistance 1.2406–1.2373, after the test of which short-term ones are relevant positions with the target at the current week’s low of 1.2040.

Resistance levels: 1.2370, 1.2725, 1.3133.

Support levels: 1.2125, 1.2050, 1.1815.

Trading tips

Long positions may be opened above 1.2190 with the target at 1.2370 and stop loss around 1.2105. Implementation time: 9–12 days.

Short positions may be opened below 1.2025 with the target at 1.1815 and stop loss around 1.2125.