Current trend

This week, the GBP/USD pair tested the 1.2695 mark (Murray level [8/8]), but could not consolidate below it and resumed attempts to grow, rising to the 1.2750 area.

Currently, the pound is supported by comments from Bank of England official Swati Dhingra, who said that a sharp drop in the cost of goods supplied by manufacturers is a sign of an imminent decline in consumer prices in the UK. Nevertheless, most experts believe that in the near future the rate of inflation growth (which in May amounted to 8.7% year-on-year) will still not be able to reach the target 2.0%. Most likely, the British regulator will raise the interest rate by 25 basis points at least twice more, bringing it to 5.50%. Accordingly, the pound will continue to receive support.

In turn, US Fed officials are beginning to think about curtailing the cycle of tightening monetary policy in order to prevent excessive pressure on the economy and on the banking sector in particular. This month, the regulator has already kept the rate at 5.25%. Experts admit the probability of another increase in the indicator by 25 basis points, but believe that it will be one of the last, after which the value will remain unchanged or even begin to decline. Further intentions of the department can be clarified by its head Jerome Powell, who will speak at the Forum of the European Central Bank on Wednesday and Thursday. In the mid-term, the difference between the monetary policies of the Bank of England and the US Fed is likely to contribute to the growth of the GBP/USD pair.

Support and resistance

The upward trend in the market continues, which is confirmed by technical indicators: the Bollinger Bands are directed upwards, the MACD is stable in the positive zone, the Stochastic reverses upwards from the oversold zone. This creates the prospect of continued growth of quotations to the levels of 1.2817 (Murray level [ 1/8]) and 1.2939 (Murray level [ 2/8]). The key for the "bears" is the middle line of the Bollinger Bands in the area of 1.2630. Its breakdown will give the prospect of a decline to the level of 1.2451 (Murray level [6/8]), but so far this option of movement seems less likely.

Resistance levels: 1.2817, 1.2939.

Support levels: 1.2630, 1.2451.

Trading tips

Long positions can be opened from 1.2730 with targets at 1.2817, 1.2939 and stop-loss at 1.2670. Implementation period: 5-7 days.

Short positions can be opened below 1.2630 with a target at 1.2451 and stop-loss at 1.2700.