The pound starts to gain strength against USD after a rapid fall in the middle of July in view of decreased demand for the US currency and positive fundamental data from the UK last week. US releases on the contrary indicate the weakening of the main sectors of the economy. Thus, the released data on the labor market and key indexes were weak again. In the beginning of the current trading week the upward dynamics in the pair continued and now the pair is trading at the level of 1.3065. In the end of this trading week attention should be paid to initial data on the economic growth rate of the UK and the USA.
Support and resistance
In the medium term the chance of further strengthening of the pound against dollar due to the fall of USD rate and growing demand for GBP is likely. The pound will receive additional support by the comments of BoE head and representatives regarding possible winding up of the economic stimulation program in the UK. Technical indicators confirm the growth forecast: MACD indicator shows growth in the volume of long position and Bollinger Bands are directed upwards.
Support levels: 1.2930, 1.2805, 1.2700, 1.2580, 1.2360, 1.2100.
Resistance levels: 1.3125, 1.3200, 1.3310, 1.3470, 1.3700.
In this situation long positions may be opened from the current level with targets at 1.3310 and stop-loss at 1.2740.