Current trend

This week, the GBP/USD pair continued to decline and is currently trading near four-month lows, around 1.2730.

The British currency is under pressure after the publication of negative September data on the labor market: the unemployment rate in the country rose to 4.3% instead of the expected 4.1%, and employment growth slowed from 373.0 thousand to 219.0 thousand, while the average wage excluding bonuses increased by 4.8% after 4.9% in August, and with them, it accelerated growth from 3.9% to 4.3%. Thus, the labor market is showing signs of cooling, but the risks of an acceleration in the pace of consumer prices remain significant. Commenting on the published data, the Bank of England's (BoE) chief economist Hue Pill said that the current price growth is still far from the target level of 2.0% and hinted at the possible consideration of further tightening of monetary policy. Despite the official's statements, most experts still expect the regulator to continue the cycle of easing monetary policy, although the likelihood of a pause in this process at the December meeting remains high.

The American currency, on the contrary, is receiving support, as investors expect the US Federal Reserve to slow down the rate of interest rate cuts against the backdrop of the new tariff policy of the administration of President-elect Donald Trump. Experts believe that the introduction of significant import tariffs along with a reduction in the tax burden will neutralize the deflationary effect of the latest actions of the American regulator and may provoke a new round of inflation. In addition, the publication of October statistics on the consumer price index is expected today: if the indicator grows from 2.4% to 2.6% YoY, the likelihood of keeping the US Federal Reserve key rate at the same level in December will increase, which may put additional pressure on the GBP/USD pair.

Support and resistance

Technically, the asset is close to the 1.2695 mark (Murrey level [0/8]), a breakdown of which will ensure a strengthening of the downward dynamics to the targets of 1.2573 (Murrey level [˗1/8]) and 1.2490 (50.0% Fibonacci retracement). The key mark for the “bulls” seems to be 1.2939 (Murrey level [2/8]), supported by the central line of Bollinger Bands, a breakout of which will allow quotes to resume growth to the levels of 1.3061 (Murrey level [3/8]) and 1.3183 (Murrey level [4/8]), but such a scenario seems less likely.

Technical indicators indicate that the downward trend will continue: Bollinger Bands and Stochastic are directed downwards, MACD is increasing in the negative zone.

Resistance levels: 1.2939, 1.3061, 1.3183.

Support levels: 1.2695, 1.2573, 1.2490.

Trading tips

Short positions should be opened below 1.2695 or after the price reversal around 1.2890 with targets at 1.2573, 1.2490 and stop-losses at 1.2790 and 1.2990, respectively. Implementation period: 5–7 days.