Current trend

During the Asian session, the GBP/USD pair is growing moderately, testing the level of 1.2700 for a breakout.

On December 14, the Bank of England left the interest rate unchanged at 5.25%: six members of the board of governors voted for this decision, while three people voted for increasing the rate. Officials noted that borrowing costs must be kept at their peak for a long time to contain runaway inflation as the country’s economy is not close enough to the bank’s 2.0% target. This week, trading participants will monitor renewed data: experts expect that the consumer price index in November will rise from 0.0% to 0.2% MoM and will adjust from 4.6% to 4.4% YoY but the core index may fall from 5.7% to 5.5%. The retail price index will slow from 6.1% to 5.8%. At the end of the week, Q3 gross domestic product (GDP) data will be published, which is expected to remain at 0.6%, and on retail sales, which, according to preliminary estimates, will increase by 0.4% after down 0.3% in October.

If the GBP/USD pair consolidates above 1.2725, the upward movement may reach the area of 1.2963. It is supported by the US Federal Reserve’s rhetoric about the end of the “hawkish” monetary policy cycle.

Support and resistance

The trading instrument is moving within a long-term upward trend, and the nearest resistance level is 1.2725, after which breakout, the growth may continue to 1.2963, and then, to the July high of 1.3133.

The medium-term trend is upwards: last week, the quotes reached zone 2 (1.2707–1.2677), and the next target is 1.3011–1.2981, and the key trend support is moving to the area 1.2490–1.2459.

Resistance levels: 1.2725, 1.2963, 1.3133.

Support levels: 1.2525, 1.2322, 1.2050.

Trading tips

Long positions may be opened above 1.2804 with the target at 1.2963 and stop loss around 1.2750. Implementation time: 9–12 days.

Short positions may be opened below 1.2525 with the target at 1.2322 and stop loss around 1.2600.