Current trend

The GBP/USD pair has been correcting downwards for the second week, testing the level of 1.2890 during the Asian session.

British investors are assessing data from the labor market. The May unemployment consolidated at 4.4%, employment changed by 19.0K against preliminary estimates of 18.0K, the average wage with bonuses changed from 5.9% to 5.7%, and excluding them – from 6.0% to 5.7%, the low since the summer of 2022. Analysts believe that macroeconomic statistics are not enough to convince the most “hawkish” members of the Bank of England that price pressure is under control. However, at the August meeting, officials may begin to ease monetary policy: in May, the indicator reached the target of 2.0%, while the rate of core inflation, excluding energy and food, approached 0.3% MoM, well below the peak of 0.9% at the beginning of last year. Overall, experts expect two cuts in borrowing costs of 25 basis points this year. Today at 10:30 (GMT 2), business activity data is due. If the manufacturing PMI rises from 50.9 points and the service PMI from 52.1 points, it will support the national currency.

American investors focused on the fundamental background. Last Sunday, the current head of the country, Joe Biden, announced his decision to withdraw his candidacy from the presidential elections, noting that he supports Vice President Kamala Harris as a new contender for the post of head of the White House from the Democratic Party. She has already received sufficient votes from fellow party members to be nominated. Nevertheless, most experts are confident in the victory of Donald Trump, who is running for the Republican Party. If he wins, tariffs on Chinese exports may be introduced to protect American manufacturers and personal and corporate taxes may be reduced, which will free up additional capital for investment but may contribute to the acceleration of inflation and a slowdown in the pace of monetary policy easing. Today at 15:45 (GMT 2), market participants will pay attention to the July manufacturing PMI, which may consolidate at 51.6 points, and to the services PMI, which may fall from 55.3 points to 54.5 points, putting pressure on the American dollar.

Support and resistance

The trading instrument is correcting downwards for the second week in a row, testing 1.2890 (Fibonacci correction 61.8%). To reverse the upward trend, the price needs to consolidate below the support zone of 1.2840–1.2817 (middle line of Bollinger Bands, Murrey level [5/8]), after which the decline will continue to the area of ​​1.2695 (Murrey level [4/8]) and 1.2573 (Murrey level [3/8]). Consolidation above 1.2939 (Murrey level [6/8]) will allow the quotes to reach the area of ​​1.3061 (Murrey level [7/8]) and 1.3183 (Murrey level [8/8]).

Technical indicators do not give a single signal: Bollinger bands are directed upwards, the MACD histogram is decreasing in the positive zone, and Stochastic is directed downwards but is entering the oversold zone, which reflects the likelihood of a reversal.

Resistance levels: 1.2939, 1.3061, 1.3183.

Support levels: 1.2817, 1.2695, 1.2573.

Trading tips

Long positions may be opened above 1.2939, with the targets of 1.3061, 1.3183, and stop loss 1.2860. Implementation period: 5–7 days.

Short positions may be opened below 1.2817, with the targets at 1.2695, 1.2573 and stop loss 1.2900.