Current trend

The GBP/USD pair is holding near 1.2200 amid the bank holidays in the US and Canadian markets. At the same time, trading participants continue to evaluate the September report on the American labor market, published on Friday, trying to predict the vector of the future monetary policy of the US Federal Reserve.

In September, the American economy managed to create 336.0 thousand new jobs, which turned out to be significantly better than forecasts of 170.0 thousand, while in the previous month the figure was 227.0 thousand. At the same time, the Unemployment Rate remained at 3.8%, while analysts expected 3.7%, and the Average Hourly Earnings added 0.2% in monthly terms and 4.2% in annual terms, which also turned out to be worse than the expected levels of 0.3% and 4.3%, respectively. After the publication of such heterogeneous data, the market revised its forecasts for a further increase in borrowing costs by the American regulator until the end of this year. Now about 42.0% of analysts are in favor of adjusting the interest rate by 25 basis points, while on Thursday the probability of such an outcome was estimated at 35.0%. At the same time, experts also expect that in 2024 the Fed will launch a rate reduction program somewhat later.

In turn, macroeconomic data from the UK, presented on Friday, had virtually no impact on the dynamics of the instrument. The Halifax Housing Price Index in September decreased by 0.4% after -1.8% a month earlier with a forecast of -0.8%, and in quarterly terms the indicator decreased by 4.7% after -4.5%.

Support and resistance

Bollinger Bands on the daily chart show a steady decline. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic is showing similar dynamics; however, the indicator line is already approaching its highs, indicating the risks of an overbought pound in the ultra-short term.

Resistance levels: 1.2240, 1.2300, 1.2350, 1.2400.

Support levels: 1.2200, 1.2150, 1.2106, 1.2036.

Trading tips

Short positions may be opened after a breakdown of 1.2200 with the target at 1.2106. Stop-loss — 1.2240. Implementation time: 1-2 days.

A rebound from 1.2200 as from support followed by a breakout of 1.2240 may become a signal for opening new long positions with the target at 1.2350. Stop-loss — 1.2200.