The British currency has moved into an active stage of upward correction against US dollar after a considerable fall in late September-early October.
At the end of the previous and beginning of the current week the pair has regained over 150 points. Today the upward tendency continued, and the pair has reached the key resistance level of 1.3200 which coincides with the upper border of the medium-term downward channel. In the long term the pair will remain in the upward trend. The main catalyst of the pair’s reversal were September employment data that may strengthen doubts about yet another increase of the rates at the end of this year. The pair is additionally supported by strong data on industrial output and processing industry output. Key US releases are scheduled for the second half of the trading week. Special attention should be paid to the release of the FOMC meeting minutes as well as the data on manufacturers’ prices index, retail sales, and labor market.
Support and resistance
Technically the pair failed to break through the lower border of the long-term downward channel. In this situation the pair keeps a growth prospect with targets at 1.3270, 1.3310. If these levels are reached, the next target will be 1.3615, 1.3650 (local maximums of mid-September 2017). A signal for the preservation of the downward trend will be the movement of the pair from the level of 1.3200 and its fall below 1.3155.
Support levels: 1.3125, 1.3020, 1.3000, 1.2930, 1.2835, 1.2805, 1.2775.
Resistance levels: 1.3200, 1.3270, 1.3310, 1.3400, 1.3450, 1.3615, 1.3650, 1.3820.
In this situation long positions may be opened form the current level with targets at 1.3270, 1.3310 and stop-loss at 1.3120.