Current trend

The GBP/USD pair is trading with a slight upward trend, consolidating near 1.2990 and local highs from October 31. Market activity remains relatively low as investors are reluctant to open new positions ahead of the US presidential election on November 5. At the same time, the current quotes for the American currency include a possible victory for the Republican candidate Donald Trump, who, among other things, is expected to tighten tariff policy and, as a result, a slower reduction in the cost of borrowing by the US Federal Reserve is projected.

Last Friday's October jobs report had only a short-term impact, as markets no longer weigh past economic successes or failures against the administration that the new president will form. In any case, the national economy created only 12.0 thousand new jobs outside the farm sector, which was a record low for Joe Biden's administration, while the number of vacancies in the previous month was 223.0 thousand, and analysts expected an increase of 113.0 thousand in October. In addition, Average Hourly Earnings adjusted from 0.3% to 0.4% month-on-month and from 3.9% to 4.0% year-on-year, while the Unemployment Rate stood at 4.1%. Separately, investors drew attention to the noticeable reduction in the Manufacturing PMI from the Institute for Supply Management (ISM) from 47.2 points to 46.5 points with preliminary estimates of 47.6 points.

UK data on Friday showed S&P Global's Manufacturing PMI fell to 49.9 points in October from 50.3 points, compared with analysts' expectations for no change, while the Nationwide Building Society Housing Price Index slowed sharply on a monthly basis from 0.6% to 0.1%, compared with expectations for 0.3%, and on an annual basis from 3.2% to 2.4%, compared with expectations for 2.8%.

The Bank of England holds its last monetary policy meeting of the year on Thursday, with economists polled by Reuters forecasting a 25-basis-point cut to 4.75%, despite Chancellor Rachel Reeves's budget last week that left investors with mixed reactions. The document envisages a significant increase in taxes to ensure the receipt of 40.0 billion pounds into the treasury: in particular, the contributions of companies to the National Insurance (NI) Fund will increase to 15.0%, and the capital gains tax (CGT) will increase from 10.0% to 18.0% for taxpayers with a low rate and from 20.0% to 24.0% for taxpayers with a high rate. All of this could put significant pressure on businesses, reducing the likelihood of profit growth, which is causing investors to fear abandoning the pound. The regulator also raised its Gross Domestic Product (GDP) forecasts for this year and next and expects the Consumer Price Index to increase from 2.5% to 2.6% in 2025.

Support and resistance

On the daily chart, Bollinger Bands are trying to reverse horizontally. The price range is almost constant, remaining rather spacious for the current level of activity in the market. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic reversed to the upside, reacting to the emergence of uncertain "bullish" dynamics at the end of last week. One should wait for development of the situation.

Resistance levels: 1.3000, 1.3050, 1.3100, 1.3150.

Support levels: 1.2948, 1.2900, 1.2860, 1.2817.

Trading tips

Long positions can be opened after a breakout of 1.3000 with the target of 1.3100. Stop-loss — 1.2948. Implementation time: 1-2 days.

A rebound from 1.3000 as from resistance, followed by a breakdown of 1.2948 may become a signal for opening of new short positions with the target at 1.2860. Stop-loss — 1.3000.