Current trend

During the Asian session, the GBP/USD pair showed flat trading near the 1.2545 mark after growth last week against positive British macroeconomic statistics.

In April, the composite PMI increased from 52.8 points to 54.1 points, above the forecast of 54.0 points, and the services PMI increased from 53.1 points to 55.0 points, compared to the estimates of 54.9 points. On Friday at 08:00 (GMT 2), Q1 gross domestic product (GDP) data is due: according to preliminary estimates, the value will increase by 0.4% QoQ after declining by 0.3% earlier.

The American dollar is supported by the change in the number of people employed in the nonfarm sector in April, which amounted to 175.0K against the forecast of 238.0K, an increase in the unemployment rate from 3.8% to 3.9% and a slowdown in average hourly wages from 0.3% to 0.2% MoM and from 4.1% to 3.9% YoY. Negative labor market data means the country can avoid economic overheating. On the other hand, US Fed officials may move faster to adjust interest rates, which will negatively affect the dollar. With the release of nonfarm payroll data, expectations for the first decline in borrowing costs, according to the Chicago Mercantile Exchange (CME) FedWatch Instrument, shift to September.

Due to these factors, the GBP/USD pair may strengthen in the medium term.

Support and resistance

The long-term downward trend: after reaching the support level of 1.2322 last month, the price went into a correction, within which it overcame the resistance level of 1.2525 and headed towards the trend border of 1.2700, after a reversal of which short positions with the target at 1.2525 are relevant, and in case of its breakdown – long positions with the target at 1.2875.

The medium-term trend is downward: last week, the quotes rose to the trend line of 1.2634–1.2603 and began a correction on Friday. If the asset fails to overcome the area of 1.2634–1.2603, a decline to 1.2306 is expected but if 1.2634 is broken, the trend will change to an upward one, and long positions with the target in zone 2 (1.2938–1.2907) are relevant.

Resistance levels: 1.2700, 1.2875, 1.2963.

Support levels: 1.2525, 1.2322.

Trading tips

Long positions may be opened from 1.2525, with the target at 1.2700 and stop loss 1.2473. Implementation time: 9–12 days.

Short positions may be opened below 1.2473, with the target at 1.2322 and stop loss 1.2540.