Current trend

During the Asian session, the GBP/USD pair is recovering from yesterday’s decline, trading at 1.2850. Investors are focusing on a block of UK key macroeconomic statistics.

The July consumer price index changed from 0.1% to –0.2% MoM and from 2.0% to 2.2% YoY instead of the expected 2.3%. The core indicator fell from 0.2% to 0.1% and from 3.5% to 3.3%, respectively, compared to the expected 3.4%, increasing the likelihood of further monetary easing by Bank of England officials. The indicators did not grow as significantly as experts expected and are in line with the Bank of England’s calculations, which assume average inflation by the end of the year at 2.75%. Industrial production in June increased by 0.8%, exceeding the forecast of 0.1% MoM but fell by 1.4% after growing by 0.4% YoY compared to expectations of –2.1%. Gross Domestic Product (GDP) showed zero dynamics, which in the second quarter means growth of 0.6%, below the 0.7% previously, and 0.7% YoY, significantly lower than the 1.4% last year.

The American dollar is trading at 102.40 in the USDX: investors have not yet fully decided on a long-term position against yesterday’s consumer price report, which showed a decrease from 3.0% to 2.9%, supporting the US Fed’s interest rate cut at the September meeting. However, experts believe that the weakening of inflation was insufficient. Yesterday, the Chicago Mercantile Exchange (CME) FedWatch Instrument recorded the probability of an adjustment in borrowing costs by –50 basis points at 53.0%, and today it is 37.0%, and the priority scenario was a change in the indicator by –25 basis points.

Support and resistance

On the daily chart, the trading instrument is correcting, approaching the resistance line of the ascending channel 1.3100–1.2740.

Technical indicators are reversing upwards: fast EMA on the Alligator indicator has almost crossed the signal line upwards, and the AO histogram is forming correction bars, increasing in the sales zone.

Resistance levels: 1.2860, 1.3010.

Support levels: 1.2800, 1.2670.

Trading tips

Long positions may be opened after the price consolidates above 1.2860, with the target at 1.3010. Stop loss — 1.2800. Implementation period: 7 days or more.

Short positions may be opened after the price consolidates below 1.2800, with the target at 1.2670. Stop loss — 1.2850.