Current trend

The GBP/USD pair is trading at 1.2828, preparing to continue its negative dynamics in anticipation of the Bank of England’s interest rate cut. The results of the regulator’s meeting are due at 13:00 (GMT 2). Analysts assume that officials will adjust the cost of borrowing from 5.25% to 5.00%, for which six out of nine board members will vote, which will put pressure on the pound, and the quotes may test the June low of 1.2617.

The American dollar is supported by macroeconomic statistics: the US consumer inflation expectations index for five years from the University of Michigan in July amounted to 3.0%, exceeding estimates of 2.9%, which contributes to the strengthening of the currency since in this case, traders hope to keep the interest rate at peak levels. The Conference Board consumer confidence index was 100.3 points, above both the forecast of 99.7 points and the previous value of 97.8 points, reflecting consumer optimism and supporting the dollar exchange rate.

Thus, before the Bank of England’s interest rate decision, there are no fundamental grounds for strengthening the pound, and it can be assumed that the decline in the GBP/USD pair will continue for some time.

Support and resistance

The long-term trend is upward but at the moment, a downward correction is developing: the price is testing the support level of 1.2830, after a breakout of which it will be able to reach the trend support level of 1.2627, where long positions, with the targets at 1.2830 and 1.3025 are relevant.

The medium-term trend is upward: in mid-July, the quotes overcame zone 2 (1.2938–1.2907) and went into correction, with the target in the trend support area of ​​1.2740–1.2710, after reaching long positions, with the target at the July high of 1.3040 are relevant.

Resistance levels: 1.3025, 1.3133.

Support levels: 1.2830, 1.2617, 1.2525.

Trading tips

Short positions may be opened below 1.2795, with the target at 1.2617 and stop loss 1.2865. Implementation period: 9–12 days.

Long positions may be opened above 1.2875, with the target at 1.3025 and stop loss 1.2814.