Current trend

The GBP/USD pair is trading at 1.2470, preparing to continue its decline amid poor macroeconomic statistics from the UK.

In April, the Nationwide Building Society house price index was –0.4% MoM, below the forecast of 0.2% and –0.2% earlier, and 0.6% YoY, relative to expectations at 1.2% and 1.6% earlier. The negative performance is helping to ease inflation overall, with the consumer price index now at 3.2% YoY after 3.4% previously, allowing Bank of England officials to move to cut interest rates earlier than markets had expected. In addition, the March number of approved mortgage loans reached 61.33K, renewing an 18-month high, while the volume of consumer lending increased by 1.577M pounds compared to 1.429M pounds previously, and the volume of net borrowings by individuals increased by 1.800M pounds with preliminary estimates of 1.700M pounds.

The American dollar is strengthening as expectations for the US Fed’s first interest rate cut are postponed to September. If inflation in the country accelerates or remains at current levels, high borrowing costs may be kept until December. Since at the beginning of the year, regulator officials expected three adjustments to the indicator this year, the shifting to one or two reductions supports the national currency.

Thus, the GBP/USD pair may continue its downward trend if positive data on the American economy is published this week.

Support and resistance

The long-term trend is downward: this week, the price unsuccessfully tested the resistance level of 1.2525, and now, a movement toward the April low of 1.2322 is likely in the long term. In the case of growth and consolidation above the resistance level of 1.2525, long positions with the target at 1.2697 are relevant.

The medium-term trend is downward: after testing 1.2306 last week, an upward correction began, and the quotes stopped below the resistance level of 1.2565. Within further decline, it may reach 1.2306 in the medium term. If the high at the beginning of the week is renewed, the asset will test the trend border of 1.2634–1.2603, from which short positions are relevant.

Resistance levels: 1.2525, 1.2697, 1.2875.

Support levels: 1.2322, 1.2058.

Trading tips

Short positions may be opened from 1.2525, with the target at 1.2322 and stop loss 1.2575. Implementation time: 9–12 days.

Long positions may be opened above 1.2575, with the target at 1.2698 and stop loss 1.2525.