Current trend

The GBP/USD pair shows unstable dynamics, holding at 1.2284, and today, the downward trend is supported by macroeconomic statistics on the UK labor market.

Thus, claimant claims increased from 9.0K to 17.8K, while employment over the previous three-month period adjusted from –82.0K to 54.0K, allowing unemployment to remain at 4.2%, although experts expected it to grow to 4.3 %. In turn, the average wage level excluding bonuses dropped from 7.9% to 7.7%, and taking them into account – from 8.2% to 7.9%. Thus, there are no drivers for the growth of the pound yet.

Further dynamics of the GBP/USD pair will most likely depend on the American dollar, the position of which may be supported by consumer inflation statistics for October: analysts expect that the change of 0.1% MoM will lead to a decrease in the value from 3.7% to 3.3% YoY, which is even closer to the US Federal Reserve’s target level of 2.0%. The core consumer price index may remain at 4.1% after a strong decline a month earlier. A further weakening of inflation will further strengthen investor confidence that the regulator will not return to raising interest rates, despite the officials’ “hawkish” comments last week.

Support and resistance

On the daily chart, the trading instrument is correcting within the local Flag pattern with dynamic boundaries of 1.2480–1.2200, approaching the lower border.

Technical indicators are weakening the unstable buy signal: fast EMAs on the Alligator indicator are approaching the signal line, and the AO histogram is forming corrective bars in the buy zone.

Resistance levels: 1.2310, 1.2430.

Support levels: 1.2220, 1.2070.

Trading tips

Short positions may be opened after the price declines and consolidates below 1.2220 with the target at 1.2070. Stop loss – 1.2300. Implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 1.2310 with the target at 1.2430. Stop loss – 1.2260.