The pair began the week with the fall from the level of 1.3030, which has been tested already in May. Today the pound is pressed by the poor June Markit Services PMI data. The index has fallen more, than expected, and reached the level of 53.4 points. The investors are concerned due to the controversial the Bank of England officials’ opinions upon the interest rate issue. Earlier the Chairman Mark Carney and the main economist Andy Haldane supported the cutting of the stimulation program or at least the discussion of the cutting. However, not all the Bank of England members support the position. On Monday Member of the monetary policy committee Gertjan Vlieghe noted that they shouldn’t increase the interest rate, as its premature change can harm the economy significantly. Thus the investors who hoped for the changing in the British monetary policy, which caused the great growth of the GBP last week, can become disappointed.
As for the fundamental factors, the USA FOMC minutes are worth traders’ attention. According to its last statement, the interest rate rise will continue, so the market expects the specific data upon the period of the increases and its numbers this year.
Support and resistance
Technically the price is in the correction after the significant growth last week. At the moment the target levels are 1.2800 (the middle line of Bollinger Bands, Fibonacci correction 23.6%) and 1.2685 (Fibonacci correction 23.6%, middle term period). In case of reversal of the price around the level of the middle line of Bollinger Bands, it can return to 1.3030, and in case of the breakout it can grow to the levels of 1.3105 and 1.3230. Technical indicators are still confirming the fall. Stochastic has left the overbought area and formed a sell signal. MACD consolidated in the positive zone.
Support levels: 1.2800, 1.2680, 1.2590.
Resistance levels: 1.3030, 1.3100, 1.3230, 1.3450.
Short positions can be opened at the current price with the targets at 1.2800, 1.2685 and stop loss at 1.2970.
In case of the reversal of the price around the level of 1.2800 or consolidation above the level of 1.3100, long positions can become relevant with the target at 1.3220 and stop loss at 1.3060.