Current dynamics

The pound trades with almost zero dynamics, consolidating near the level of 1.2800: the day before, the quotations renewed the local highs from June 12, but closer to the end of the afternoon session, the bulls lost most of the positions they had gained. Factors supporting the British currency, including the results of the parliamentary elections, in which the Labor Party won for the first time in 14 years, supporting an active reduction in public spending, are gradually weakening.

The driving force behind the growth of the GBP/USD pair remains the weakness of the US dollar, which came under pressure from Friday's labor market report: the number of new non-agricultural jobs created by the US economy in June dropped from 218,000 to (after revision from 272.0 thousand) to 206.0 thousand which, however, was a better result than expected PLN 190.0 thousand. Average hourly earnings slowed from 4.1% to 3.9% on an annual basis and from 0.4% to 0.3% on a monthly basis, which should have a positive impact on further reducing inflation risk, and the unemployment rate was revised from 4. 0% to 4.1%, while analysts expected no changes. As such, weak labor market data could put additional pressure on U.S. Federal Reserve officials to launch a rate-cutting program, but markets still expect one or two rate cuts before the end of the year, with the first likely to come no earlier than September meeting.

On Thursday, UK investors will turn their attention to May's gross domestic product (GDP) data, where the domestic economy is expected to grow from 0.0% to 0.2%, while industrial production may increase by 0.6% year-on-year after a correction of -0.4% earlier and 0.2% month-on-month after a sharp decline of 0.9%.

Meanwhile, new Prime Minister Keir Starmer said during a visit to Scotland that Labor was already working to strengthen ties with the European Union in a bid to change trade rules between the nations that were signed by former British Prime Minister Boris Johnson in 2020. Nevertheless, representatives of the analytical center "Britain in a Changing Europe" are convinced that these plans will have only a minimal impact on reducing public spending, which increased dramatically after Great Britain left the EU. Experts also note that 78.0% of Labor Party voters would vote for the country's return to the EU.

Support and resistance levels

On the daily chart, Bollinger Bands are showing active growth: the price range is expanding, but is currently not keeping pace with the increase in bullish sentiment. MACD maintains a relatively strong buy signal, being above the signal line, and Stochastic, after reaching maximum values, turns down, indicating the risk of overbought the pound in the ultra-short term.

Resistance levels: 1.2817, 1.2860, 1.2900, 1.2963.

Support levels: 1.2776, 1.2730, 1.2700, 1.2650.

Trading scenarios

Short positions can be opened after a certain break of the 1.2776 level down with a target of 1.2700. Stop-loss - 1.2817. Delivery time: 1-2 days.

The rebound from the level of 1.2776 as from the support with the subsequent upward break of the level of 1.2817 may be a signal for long positions with the target of 1.2900. Stop-loss - 1.2776.