The pair GBP/USD has been in the main trading range of 1.3010 and 1.2970 for the fourth day in a row, sometimes breaking it down. On Thursday positive data on the volume of production output were released from the UK: in June the indicator grew by 0.5% MoM and 0.3% YoY. On the other hand, a report by the National Institute for Economic and Social Research showed the reduction of GDP growth within recent three months from 0.3% to 0.2%, but the indicators are expected to grow in the second half of the year.
Weak reaction of the market on this data and continuation of trading in the narrow side range are explained by expectations from today’s US CPI statistics. The growth of average salary (by 0.3% in July) and import prices (by 0.1% in July) may push inflation upwards. The general index of consumer prices may grow from 0.1% to 0.2% MoM and from 1.6% to 1.8% YoY. The basic index will grow from 0.0% to 0.2% MoM and remain on the level of 1.7% YoY. The level of inflation is known to be a key indicator for the Fed in the area of increasing the interest rate. Janet Yellen confirmed it in her July statement before the Congress. Therefore, the implementation of forecasts on CPI may give the market hope and strengthen the positions of the US currency.
Support and resistance
Technically, the pair is trading in the main side range 1.3010 and 1.2970 but is close to consolidation below its lower border and reduction to 1.2930 (Fibo correction 50.0%, Murrey level [4/8]) and 1.2850 (Fibo correction 61.8%). One may speak about growth if the price consolidates above the level of 1.3010 or returns to the upward channel (at 1.3050). In this case growth may continue to 1.3105 (Fibo correction 23.6%), 1.3150 and 1.3200.
Support levels: 1.2970, 1.2930, 1.2850.
Resistance levels: 1.3010, 1.3050, 1.3105, 1.3150, 1.3200.
In the current situation short positions seem preferable. They should be opened at the current price with targets at 1.2930 and 1.2850 and stop-loss at 1.3000.
Long positions may be opened from the level of 1.3050 with targets at 1.3150 and 1.3200 and stop-loss at 1.3010.