This week the GBP/USD pair is trading in the downward correction from the June maxima at the area of 1.3030.
Today the employment market data have slowed the fall around the middle line of Bollinger Bands (1.2850). The Unemployment rate in the UK has been lowering since 2012, when it was more than 8%, and in May the indicator reached the level of 4.5%. Claimant Count Change was significantly lower than expected (grew by 6K). The slow growth of earnings is troubling, as in May it was 1.8%. The indicator has been slightly decreasing since the end of the last year, which can affect the purchasing power and the GDP negatively. The Bank of England noted this trouble in May, when it has decreased the economy growth expectations from 2.0% to 1.9%. Taking into consideration the problems on the EU and the UK Brexit negotiations, the position of the pound in the middle term period seems doubtful.
Today the key fundamental issue is Fed’s Yellen testifies in Congress. Usually the head of the FRS prefers not to make the investors worried, however at the moment any her implication on the interest rate rise period or the balance sheet reduction volume can stir up the market. The traders are trying to stay on the safe side and buy the USD. The Beige Book, which will be published today, can affect the monetary policy decisions too.
Support and resistance
Technically the price is near the middle line of Bollinger Bands and the key support level of 1.2800 (Fibonacci correction 23.6%). In case of the breakdown the price can fall to the levels of 1.2680 and 1.2600 (the lower line of Bollinger Bands). However the indicators reflect the significant possibility of the technical growth (Stochastic is reversing in the oversold area). In this scenario in case of the reversal around 1.2850 the price can return to the level of 1.3030 and grow to the level of 1.3100.
Support levels: 1.2800, 1.2680, 1.2600.
Resistance levels: 1.2930, 1.3030, 1.3100.
Short positions can be opened after the price is set below the level of 1.2800 with the targets at 1.2680 and 1.2600 and stop loss at 1.2840.
If the price is set above the level of 1.2930 long positions can become relevant with the targets at 1.3030, 1.3100 and stop loss at 1.2900.