The ongoing trend

The GBP/USD currency pair is declining at 1.2633: Pound prices continue their disappointing momentum amid the US dollar rally.

UK inflation statistics will be released at 09:00 (GMT 2) on Wednesday. According to forecasts, traders expect the consumer price index to rise from 1.7% to 2.2%, potentially exceeding the 2.0 percent target. For the Bank of England, this is an argument to postpone the change in bond terms, as the situation on the housing market also remains tight: Moneyfacts Group Plc. reported that the interest rate on a five-year fixed-rate mortgage reached 5.4955% on Friday, compared to 5.4205% a week ago. The UK economy is under pressure from the significant increase in the tax burden on companies announced by Chancellor of the Exchequer Rachel Reeves in the new budget. The monetary authorities must now choose whether to continue their dovish rhetoric and thus reduce the pressure on companies and households, or to raise the interest rate to curb inflation. Catherine Mann, a member of the Board of Governors of the Bank of England, said last week that it was necessary to keep borrowing costs at the same level until the risks of a loss of purchasing power and an increase in the general price level of goods and services were removed, including those related to the election of Republican Donald Trump as President of the United States.

US dollar quotes traded this morning slightly below Friday's highs of 106.50 pink (USDX), as investors are once again focusing on macroeconomic factors, of which the October real estate market report tomorrow at 15:30 (GMT 2) is particularly interesting. Despite the progress of the US economy since the beginning of autumn, the sector still showed weak results. Analysts expect the number of building permits issued in October to be 1.440 million (1.425 million in the previous month), while the volume of housing starts could fall from 1.354 million to 1.340 million. The negative trend from September may continue (-0.5% in September).

support and resistance

In the daily chart, GBP/USD is correcting and is holding well below the support line of the uptrend channel with the dynamic boundaries of 1.3450-1.2900.

The technical indicators have reversed and are now reporting a stable sell signal: the fast EMAs of the Alligator indicator are moving away from the signal line, the AO histogram is forming new correction bars and is in the sell zone.

Supports: 1.2600, 1.2350.

Resistances: 1.2690, 1.2890.

trading tips

Short positions are intact in case of downside movement with price consolidation below the support of 1.2600 with target of 1.2350 and stop loss at 1.2700. Validity: 7 days or more.

Long positions are relevant in case of a correlated upward movement with price consolidation above the resistance line of 1.2690 with a price target of 1.2890 and a stop loss at 1.2600.