Current trend

The GBP/USD pair has been falling for the second month as part of a medium-term downward trend. Last week, the price reached six-month lows around 1.2300, after which it began a corrective rise and is currently testing the middle line of Bollinger bands around 1.2520.

Positive dynamics are developing against macroeconomic statistics: despite the April slowdown in the business activity index in the industrial sector, the composite indicator rose to 54.0 points. Against this background, a new acceleration in inflation is likely, which will allow Bank of England officials to maintain high interest rates longer than experts previously expected. Thus, at the beginning of the week, the regulator’s chief economist, Hugh Pill, said there was still a long way to go before reducing borrowing costs and expressed concern about the possibility of a premature monetary policy adjustment. Most experts still believe that the transition to a dovish rate will be in June. However, some analysts expect this decision to be postponed to the third quarter, which provides additional support to the pound.

However, the asset’s growth may be temporary, as US Federal Reserve economists may also delay monetary easing until the fall due to rising inflation pressures. Officials are focusing on first-quarter gross domestic product (GDP) data, which will be published at 14:30 today (GMT 2), and the March personal consumption price index, which is due at the same time on Friday. According to preliminary estimates, the US economy will adjust from 3.4% to 2.5%, and the core spending index from 2.8% to 2.6%. Experts fear that the figure will exceed forecasts, increasing the likelihood of delaying interest rate adjustments and putting pressure on assets alternative to the American dollar.

Support and resistance

The trading instrument is testing the middle line of Bollinger Bands 1.2520, after breaking through it and breaking through 1.2573 (Murrey level [7/8]), growth to the area of 1.2695 (Murrey level [8/8]) and 1.2890 (Fibonacci correction 61.8%) is expected. Otherwise, the decline will resume to 1.2391 (Murrey level [5/8]) and 1.2207 (Murrey level [4/8]).

Technical indicators reflect a continuation of the downward trend: Bollinger bands are directed downwards, and the MACD histogram is decreasing in the negative zone. Stochastic is directed upward but has approached the overbought zone and may soon reverse downwards.

Resistance levels: 1.2573, 1.2695, 1.2890.

Support levels: 1.2329, 1.2207.

Trading tips

Short positions may be opened from 1.2420, with the targets at 1.2329, 1.2207, and stop loss 1.2490. Implementation time: 5–7 days.

Long positions may be opened above 1.2573, with the targets at 1.2695, 1.2890, and stop loss 1.2510.