Current trend

The GBP/USD pair is retreating from its annual highs, holding around 1.3120: the pound did not fully take advantage of the slowdown in the US dollar last week, so the local dynamics of quotes may be related to investors' reaction to the macroeconomic statistics published today in the UK. So, at the end of August, the Services PMI rose from 52.5 points to 53.7 points with a forecast of 53.3 points, and the Composite PMI – from 52.8 points to 53.8 points.

The US dollar is trading around 101.50 in USDX, while investors are awaiting tomorrow’s data on the number of open vacancies in the labor market from JOLTS, which, according to preliminary estimates, may show a decline from 8.148 million to 8.090 million. In addition, the weak dynamics of the dollar may be associated with yesterday’s business activity reports, which showed traditional discrepancies in the calculation methodology: thus, the Markit Manufacturing PMI fell to 47.9 points from 49.6 points, while the same indicator from the Institute for Supply Management (ISM), on the contrary, increased to 47.2 points from 46.8 points. In general, the trend in the sector is positive: the price index rose to 54.0 points from 52.9 points, and the employment index – to 46.0 points from 43.4 points.

Support and resistance

On the D1 chart, the GBP/USD pair is correcting, moving away from the resistance line of the ascending channel with the boundaries of 1.3180–1.2800.

Technical indicators have long since turned in the direction of increase but are weakening the signal: fast EMAs on the Alligator indicator are approaching the signal line, and the AO histogram is forming new correction bars, falling in the purchase zone.

Support levels: 1.3045, 1.2894.

Resistance levels: 1.3165, 1.3350.

Trading tips

In case of a reversal and continued decline of the asset, as well as consolidation of the price below the support level of 1.3045, one may open sell positions with a target of 1.2894. Stop loss – 1.3100. Implementation period: 7 days or more.

In case of continued corrective growth of the asset and consolidation of the price above the resistance level of 1.3165, buy positions with a target of 1.3350 will be relevant. Stop loss – 1.3100.