Current trends

The GBP/USD pair is trading in an uptrend, continuing to develop a very short-term " bull market " trend and updating the high of November 14. The pound is regaining some ground as the US markets are closed for Thanksgiving and market fundamentals have changed insignificantly. Investors expect monetary easing in both the UK and the US, but the Bank of England's stance looks more sensitive due to signs of significant weakening of domestic demand. In addition, the regulator has managed to reduce price pressures significantly, reaching the upper limit of the target range. In any case, UK inflation has fallen amid a sharp decline in business activity : November data released late last week showed that the manufacturing PMI fell from 49.9 points to 48.6 points, compared to neutral expectations, while the S&P Global Services PMI fell from 52.0 points to 50.0 points, compared to analysts' expectations of 52.1 points.

Investors will be focusing on the Financial Stability report later today, as well as the minutes from the Bank of England's November meeting, as analysts look for confirmation of the possibility of a cut in borrowing costs at the December meeting, as well as an assessment of the potential pace of monetary easing. Also due at 11:30 (GMT 2) is the publication of consumer credit data for October, which is expected to have risen from £ 3.8 billion to £ 4.1 billion.

Market participants are currently focused on the rhetoric of the monetary authorities. So Clare Lombardelli, deputy governor for monetary policy at the Bank of England, told The Financial Times that the new US President Donald Trump’s announcement of a 25.0% tariff on Mexican and Canadian imports and an additional 10.0% tariff on Chinese imports could accelerate global inflation, even in countries not directly subject to these tariffs, as manufacturers look for new markets. The Bank of England is trying to predict how the measures will affect the country’s economy and plans to adjust borrowing costs at its upcoming meeting, based on the rhetoric of the new White House leader. Among other things, according to official data, China, Mexico and Canada account for 40.0% of the US’s annual imports, worth a combined $ 3.2 trillion.

Support and resistance

On the daily chart, Bollinger Bands are trying to reverse horizontally. The price range is narrowing, reflecting the vague nature of trading in the very short term. MACD is growing, maintaining a stable buy signal ( above the signal line ). Stochastic is growing steadily, but is rapidly approaching its highs, reflecting the risk of an overbought pound in the very short term.

Resistance levels : 1.2730, 1.2776, 1.2817, 1.2860

Support levels : 1.2700, 1.2650, 1.2600, 1.2550

Trading Tips

You can open a long position after breaking at 1.2730 with a target at 1.2817. Stop loss — 1.2690. Execution time : 2-3 days.

A rebound from 1.2730 from resistance followed by a break at 1.2700 could become a signal to open a short position with a target at 1.2600. Stop loss — 1.2750.