Current trend

The GBP/USD pair is rising within the long-term uptrend, testing 1.3427 (Murrey level [6/8]).

The American dollar is under pressure after the US Fed’s decision to start easing monetary policy. Last week, officials adjusted the interest rate by –50 basis points to 5.00%, relying on a stable slowdown in inflation and the labor market. Experts expect that the indicator will decrease twice more before the end of the year, in November and December, by a total of 50 basis points since the risks of a significant increase in unemployment prevail over the acceleration of consumer price growth.

The Bank of England officials maintain a more cautious stance. In August, they cut the cost of borrowing from 5.25% to 5.00% but kept it at this level at the September meeting. According to comments from the regulator’s representatives, Andrew Bailey, Catherine Mann, and Megan Green, economists expressed concern about the high rate of growth in prices in the service sector (5.6% in August) and the dynamics of wage growth (5.1% in July), which can contribute to inflation, so they are unlikely to decide on significant easing of monetary policy soon. According to most experts polled by Reuters, another change in the interest rate of –25 basis points may follow in November.

Thus, the difference in the rhetoric of the US and UK financial authorities may support the upward trend in the GBP/USD pair.

Support and resistance

The trading instrument is testing 1.3427 (Murrey level [6/8]). The consolidation above will allow it to reach the area of ​​1.3549 (Murrey level [7/8]) and 1.3672 (Murrey level [8/8]). In case of a breakdown of 1.3183 (Murrey level [4/8]), supported by the middle line of Bollinger bands, a decline to the area of ​​1.2890 (Fibonacci correction 61.8%) and 1.2695 (Murrey level [0/8]) may follow.

Technical indicators reflect that the upward trend in the market will continue: Bollinger bands and Stochastic are directed upward, and the MACD histogram is increasing in the positive zone.

Resistance levels: 1.3427, 1.3549, 1.3672.

Support levels: 1.3183, 1.2890, 1.2695.

Trading tips

Long positions may be opened above 1.3427, with the targets at 1.3549, 1.3672, and stop loss 1.3330. Implementation period: 5–7 days.

Short positions may be opened below 1.3183, with the targets at 1.2890, 1.2695, and stop loss 1.3265.