On Tuesday the pair continued to grow and by now has reached its three weeks maximums at 1.2860. The driver of growth for the British currency was a financial stability report from the Financial Policy Committee (FPC) of the Bank of England and a statement by its head Mark Carney. He pointed out that during crisis the British financial system had considerably strengthened. The Bank has some concerns about the situation in the credit sphere especially in consumer crediting. In case of future economic turmoil the credits may be partially left unpaid, and therefore banks are recommended to save11.4 bln pounds within the upcoming 18 months to increase financial stability. The risks faced by the financialsytem remain regular. On the other hand, Mario Draghi put pressure on USD by stating that the economy of Eurozone continued to restore and current ECB policy effectively facilitated the growth of inflation.
Today the movement of the price may depend on fundamental factors. Namely, the heads of major world central banks are to speak at the ECB conerence: Draghi from ECB, Carney from the Bank of England, Kuroda from the Bank of Japan, and Poloz from the Bank of Canada.
Support and resistance
Technically in the beginning of May the price entered the downward channel and is currently testing its upper border (around 1.2860). After breaking though it it may go up to 1.2980 (upper line of Bollinger Bands) and 1.3030 (May maximums). A key level for the “bears” will be 1.2785 (meeting of the middle line of Bollinger Bands and Fibo correction 23.6%). Its breakdown will open the way for a drop to 1.2640 (Fibo correction 38.2%) and 1.2590 (lower line of Bollinger Bands). Indicator show growth. MACD histogram has crossed the signal line from below and formed a buy signal. Stochastic is directed upwards but is approaching the overbiught zone which may indicate reversal.
Support levels: 1.2785, 1.2640, 1.2515.
Resistance levels: 1.2860, 1.2980, 1.3030.
In the current situation long positions may be opened above 1.2860 with targets at 1.2980, 1.3030 and stop-loss at 1.2810.
If the price consolidates below 1.2785 short positions may be opened with targets at 1.2640, 1.2590 and stop-loss at 1.2840.