Current trend

The GBP/USD pair is retreating from record highs reached at the end of last week, testing 1.3200 for a breakdown, while traders are trying to determine the further prospects for price movement.

Investors' attention remains focused on speeches by the heads of the US Federal Reserve and the Bank of England at the annual Economic Symposium in Jackson Hole, which opened on Friday, August 23. Jerome Powell's speech turned out to be "dovish": the official noted that the time has come to reduce the cost of borrowing, and that it is now important to prevent excessive cooling of the labor market, and that it is a matter of time before inflation reaches the target of 2.0%. However, he did not give any signals regarding the volume of the adjustment, although experts had hoped to hear about plans to change the rate by 50 basis points at once during the September meeting. In turn, the Governor of the British regulator Andrew Bailey noted that the final victory over inflation has not yet been achieved, but its pace has slowed down significantly: the indicator has adjusted from a 41-year high of 11.1% in October 2022 to 2.0% in May and June. Officials are currently revising their forecasts for a second wave of consumer price index growth, as the real economic situation has proven to be more favorable than preliminary estimates. During the August meeting, the interest rate was reduced from 5.25% to 5.00%, and now experts expect that the indicator will be maintained at this level in September, but in November the "dovish" rhetoric will continue.

On Friday, market participants will pay attention to July statistics on consumer credit dynamics in the UK and the US personal consumption expenditure price index. Forecasts for the latter suggest that the Core PCE will remain at 0.2% by the end of July, while year-on-year growth of 2.6% is likely. In turn, the Nationwide Building Society's house price index, which measures the change in the average price of a home with a mortgage issued by the society in the United Kingdom and is a leading indicator of the national property market, could fall by 0.3% to 0.2% by the end of August, reflecting the impact of the long-term "hawkish" policy on the sector. For now, traders are focusing on data from the GfK Group consumer confidence index, which measures the spending of UK residents as part of economic activity: in August, it was recorded at –13.0 points, reaching a maximum in almost three years, contrary to forecasts of –12.0 points. Experts say the financial situation of the British people is recovering, helping to change their views on the state of the national economy.

Support and resistance

On the daily chart, Bollinger Bands are steadily growing. The price range is expanding, barely keeping up with the surge in "bullish" sentiment in the market. MACD is growing, maintaining a stable buy signal and being located above the signal line. Stochastic, having reached its highs, is trying to reverse into a downward plane, signaling the risks of the pound being overbought in the ultra-short term.

Resistance levels: 1.3250, 1.3300, 1.3375, 1.3435.

Support levels: 1.3188, 1.3150, 1.3100, 1.3050.

Trading tips

Short positions may be opened after a breakdown of 1.3188 with the target at 1.3050. Stop-loss — 1.3250. Implementation time: 2-3 days.

A return of "bullish" sentiment followed by a breakout of 1.3250 upwards could be a signal to open long positions with a target of 1.3375. Stop-loss — 1.3188.