In the end of the last week after the Bank of England meeting and US employment market strong data publication the pair was corrected to the border of the upward channel to the area of 1.3010 (Fibonacci correction 38.2%). At the moment the pair is trading within the range of 1.3060–1.3010. Investors are waiting for Thursday, when the UK June Trade Balance and Industrial Production data will be published, and for Friday, when the USA July Consumer Price Index will be released.
There is no strong diver for the pair to move. Today the BRC Like-For-Like Retail Sales data were published, which growth exceeded the expectations and reached the level of 0.9%. However, the publication pushed the price only to the upper border of the range at the level of 1.3060. The background for the GBP is still negative, mainly due to Brexit situation. The negotiations provide more and more question, and the recent one is the problem with the UK laws. Now it is subject to the laws of the Supreme Court of the EU, but it’s unclear which laws will British companies working in the EU after the end of the Brexit will be subject to.
Support and resistance
From the beginning of the week the pair is trading within the range of 1.3010–1.3060, the lower border of which coincides with the Fibonacci correction 38.2%, as the upper one is near the middle line of Bollinger Bands and the strong Murray [6/8]. The consolidation of the price below the level of 1.3010 will let the pair to fall to the levels of 1.2930 (Fibonacci correction 50.0%, Murray [4/8]) and 1.2850 (Fibonacci correction 61.8%). In case of the breakout of the level of 1.3060 the price can grow to the levels of 1.3105 (Fibonacci correction 23.6%), 1.3155, 1.3200.
Support levels: 1.3010, 1.2930, 1.2850.
Resistance levels: 1.3060, 1.3105, 1.3155, 1.3200.
Short positions can be opened after the consolidation of the price below the lower border of the upward channel and the level of 1.3010 with the targets at 1.2930 and 1.2850 and stop loss at 1.3050.
If the price is set above the level of 1.3060, long positions will become relevant with the targets at 1.3105, 1.3155, 1.3200 and stop loss at 1.3020.