Current trend

The GBP/USD pair is showing corrective growth, testing 1.2600 for a breakout: the instrument is recovering its losses from the end of last week, but activity in the market remains low. Trading participants are analyzing the results of the meetings of the US Federal Reserve and the Bank of England, during which the interest rate was kept unchanged, still hoping that the American regulator may decide to lower the cost of borrowing for the first time around June, while the British one may move on to similar actions only by August or even later.

Macroeconomic statistics from the UK exerted additional pressure on the pound last Friday. Retail Sales volumes in February showed zero dynamics in monthly terms after growing by 3.6% in the previous month, while analysts expected 0.3%; in annual terms, the figure decreased by 0.4% after increasing by 0.5% with the forecast at -0.7%, and Retail Sales excluding Fuel added 0.2% after 3.4% in January. Manufacturers are increasing their expectations for selling prices for the third month, according to research from the Confederation of British Industry (CBI), as disruptions in Red Sea shipping wreak havoc on supply chains and push up oil prices. However, the organization's experts note that businesses expect economic conditions to improve in the next quarter. The Consumer Confidence Index from the Gfk Group analytical portal remained at -21.0 points in March, contrary to expectations at -19.0 points.

On Thursday, March 28, final UK Gross Domestic Product (GDP) statistics for the fourth quarter of 2023 will be published. The current estimate suggests that the national economy will lose 0.3% in quarterly terms and 0.2% in annual terms.

Support and resistance

Bollinger Bands on the daily chart show a steady decline. The price range is expanding from below; however, it fails to catch the surge of the "bearish" sentiment at the moment. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic, having reversed upwards near the level of "20", signals in favor of the possible development of corrective growth in the ultra-short term.

Resistance levels: 1.2650, 1.2700, 1.2734, 1.2771.

Support levels: 1.2600, 1.2550, 1.2500, 1.2450.

Trading tips

Long positions can be opened after a breakout of 1.2650 with the target of 1.2734. Stop-loss — 1.2600. Implementation time: 1-2 days.

A rebound from 1.2650 as from resistance, followed by a breakdown of 1.2600 may become a signal for opening of new short positions with the target at 1.2500. Stop-loss — 1.2650.