Current trend

During the Asian session, the GBP/USD pair developed the “bullish” momentum formed yesterday and tested the level of 1.2530 for a breakout, despite poor UK macroeconomic statistics.

In April, according to the Nationwide Building Society, the housing price index continued its negative trend from –0.2% to –0.4% compared to forecasts of 0.2%, and dropped from 1.6% to 0.6% YoY, although experts expected 1.2%. The manufacturing PMI corrected from 50.3 points to 49.1 points, exceeding expectations of 48.7 points. Tomorrow at 10:30 (GMT 2), S&P Global services PMI is due, which may remain at 54.9 points, and the composite indicator at 54.0 points.

The American dollar is trading at 105.50 in USDX. The US Fed’s two-day monetary policy meeting ended yesterday, as a result of which officials kept the interest rate at 5.25–5.50%, as expected, and the high amount of bonds available for reinvestment was reduced from 60.0B dollars to 25.0B dollars. The head of the regulator, Jerome Powell, noted that inflation is above the target level of 2.0%, without showing a sustainable decline, impeding the easing of monetary policy. This statement disappointed market participants, who expected a change in course this summer.

As for macroeconomic statistics, the April Institute for Supply Management (ISM) manufacturing PMI adjusted from 50.3 points to 49.2 points, while analysts expected 50.0 points, and Automatic Data Processing (ADP) nonfarm payrolls in the private sector – from 208.0K to 192.0K compared to forecasts of 175.0K.

Support and resistance

On the daily chart, the trading instrument is correcting below the resistance line of the downward channel 1.2350–1.2560.

Technical indicators are weakening the sell signal: fast EMA on the Alligator indicator are approaching the signal line, and the AO histogram is forming corrective bars, rising in the sell zone.

Resistance levels: 1.2560, 1.2670.

Support levels: 1.2490, 1.2350.

Trading tips

Long positions may be opened after the price rises and consolidates above 1.2560, with the target at 1.2670. Stop loss – 1.2500. Implementation period: 7 days or more.

Short positions may be opened after the price declines and consolidates below 1.2490, with the target at 1.2350. Stop loss – 1.2530.