Current trend

The GBP/USD pair is trading with a downward trend, testing 1.3020 for a breakdown, and investors are focused on the block of macroeconomic statistics from the UK. The Consumer Price Index in annual terms in September slowed sharply from 2.2% to 1.7% with a forecast of 1.9%, and in monthly terms — from 0.3% to 0.0%, while the market expected 0.1%. The Core CPI fell from 3.6% to 3.2%, while analysts had expected 3.4%.

Market participants also continue to evaluate the UK labor market report presented the day before: the Claimant Count Change in September increased from 23.7 thousand to 27.9 thousand with expectations of 20.2 thousand, the Net Employment Change in August rose from 265.0 thousand to 373.0 thousand, and the Unemployment Rate adjusted from 4.1% to 4.0%. At the same time, Average Earnings Including Bonus fell from 4.0% to 3.8%, and Excluding Bonus — from 5.1% to 4.9%.

Meanwhile, moderate pressure on the position of the American currency was exerted the day before by data on NY Empire State Manufacturing Index: in October, the index fell from 11.5 points to –11.9 points, while experts expected –2.3 points. Tomorrow, the US will release September Retail Sales and Industrial Production data, with sales expected to rise 0.1% to 0.3%, and the rate excluding autos expected to be 0.1%.

Support and resistance

Bollinger Bands on the daily chart show a steady decline. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD indicator is trying to reverse upwards, forming a new buy signal (located above the signal line). Stochastic grows more steadily and is rapidly approaching its highs, which reflects risks of the overbought instrument in the ultra-short term.

Resistance levels: 1.3050. 1.3100, 1.3150, 1.3200.

Support levels: 1.3000, 1.2948, 1.2900, 1.2860.

Trading tips

Short positions may be opened after a breakdown of 1.3000 with the target at 1.2900. Stop-loss — 1.3050. Implementation time: 1-2 days.

A rebound from 1.3000 as from support followed by a breakout of 1.3050 may become a signal for opening new long positions with the target at 1.3150. Stop-loss — 1.3000.