After considerable growth in late June and early July the pair reached the key resistance level of 1.3040 and moved to downward correction. The main catalyst of the fall was the change in trading tendencies. USD was supported by FOMC Chair Janet Yellen who pointed out the improvement of the US financial system at the recent press conference.
Today in the first half of the trading day the current dynamics of the pair’s movement was supported by negative economic statistics on the UK construction PMI. A number of key releases from the USA and the UK in the second half of the week will determine further movement of the pair. The data on industrial output and processing industry will be released in the UK, and the USA will respond with releases from the labor market and main indexes.
Support and resistance
Despite falling investors’ interest in the pound, the volume of long positions in the pair remains high. A new wave of demand for the pound is expected on the key support levels. Dollar remains under pressure, and any negative data may have dramatic influence on it.
Today the pair GBP/USD tested the level of 1.2910, and in the short term it is expected to grow. The pair is near the upper border of the upward channel, which promises a longer downward correction in the medium term. Technical indicators point out to the width of the channel. For example, Bollinger Bands have expanded.
Support levels: 1.2910, 1.2890, 1.2770, 1.2700, 1.2620, 1.2560, 1.2500, 1.2285, 1.2125, 1.1990.
Resistance levels: 1.2955, 1.2990, 1.3040, 1.3075, 1.3115, 1.3200, 1.3255.
In this situation short positions may be opened from the key resistance levels of 1.3115, 1.3200 with targets at 1.2770 and 1.2500, 1.2365 in the medium term. Stop-loss may be placed at 1.3270.