GBP/USD: THE MEDIUM-TERM TREND CHANGED TO UPWARD LAST WEEK

Current trend

The GBP/USD pair reached 1.2698 against information on the UK labor market and the weakening of the American currency after the publication of US macroeconomic statistics. Thus, the April consumer price index slowed from 3.5% to 3.4% YoY and from 0.4% to 0.3% MoM, and the core figure, as expected, adjusted from 3.8% to 3.6% and from 0.4% to 0.3%, respectively.

On Wednesday at 8:00 (GMT 2), investors will pay attention to British inflation data. According to preliminary estimates, the April consumer price index will fall from 3.2% to 2.1% YoY, and the core index will fall from 4.2% to 3.7%, as a result of which the likelihood of a Bank of England interest rate cut during the June meeting will increase sharply. Meanwhile, in this period, claimant count change amounted to 8.9K, better than the forecast of 13.9K, and the previous figure was revised from 10.9K to –2.4K. In three-month terms in March, the value was –177.0K compared to estimates of –215K. The average salary level with bonuses increased by 5.7%, better than the forecast of 5.3%, supporting the GBP/USD pair.

The long-term trend is downward: until a breakout of the resistance level of 1.2698, the sales target is the support level of 1.2525. After consolidation below, the price may renew the April low of 1.2322. After consolidation above the resistance level of 1.2698, the long-term trend will reverse upwards, and long positions, with the target at the March high of 1.2875 are relevant.

The medium-term trend changed upwards when the quotes broke through the resistance area of 1.2634–1.2603, with the target in zone 2 (1.2938–1.2907). In case of a decline to the support zone of 1.2559–1.2544, long positions, with the target at the current week’s high of 1.2710 are relevant, and the key trend support will shift to the area of 1.2407–1.2377.

Support and resistance

Resistance levels: 1.2698, 1.2875, 1.2963.

Support levels: 1.2525, 1.2322.

Trading tips

Short positions may be opened from 1.2700, with the target at 1.2525 and stop loss 1.2758. Implementation time: 9–12 days.

Long positions may be opened above 1.2758, with the target at 1.2900 and stop loss 1.2698.