Current trend

The GBP/USD pair has been actively increasing in value since the beginning of August and is currently testing 1.3122 (Murrey level [7/8]). The American currency is under pressure amid expectations of an imminent change in the monetary rate, confirmed by the minutes of the July meeting of the US Fed, published yesterday. According to the document, most board members agreed that with further positive inflation data, easing the parameters at the next (September) meeting would be an appropriate step. The annualized consumer price index fell from 3.0% to 2.9% in July. Now, the markets will focus on Friday’s speech by US Fed Chairman Jerome Powell at the Jackson Hole Economic Symposium in the hope of receiving new signals from him regarding the timing and volume of interest rate adjustments.

On the contrary, the pound is strengthening its positions, supported by strong August business activity. The manufacturing rose from 52.1 points to 52.5 points, the services PMI from 52.5 points to 53.3 points, and the composite PMI adjusted from 52.8 points to 53.4 points, confirming the positive pace of recovery of economic activity. In general, favorable conditions are created in the British economy for further adjustment of monetary stimuli – its growth is strengthening, employment indicators are improving, and inflation is actively slowing down. True, the growth rate of consumer prices in the services sector remains significant, which allows experts polled by Reuters to assume only one interest rate cut this year, while the US Fed could ease monetary policy two or three times, which would put more serious pressure on the dollar in the medium term.

Support and resistance

Technically, the instrument is testing 1.3122 (Murrey level [7/8]), a breakout of which will allow growth to 1.3244 (Murrey level [ 1/8]) and 1.3305 (Murrey level [ 2/8]). The key “bearish” level is 1.2878 (Murrey level [3/8], Fibonacci correction 61.8%, middle line of Bollinger bands). After a breakdown, the downward dynamics will intensify to the area of ​​1.2695 (Murrey level [0/8]) and 1.2634 (Murrey level [–1/8]).

However, it seems less likely since technical indicators reflect the continuation of the upward trend: Bollinger bands are directed upward, the MACD histogram is increasing in the positive zone, and Stochastic is horizontal in the overbought zone.

Resistance levels: 1.3122, 1.3244, 1.3305.

Support levels: 1.2878, 1.2695, 1.2634.

Trading tips

Long positions may be opened above 1.3122, with the targets at 1.3244, 1.3305 and stop loss 1.3060. Implementation period: 5–7 days.

Short positions may be opened below 1.2878, with the targets at 1.2695, 1.2634 and stop loss 1.3000.