Current trend

The GBP/USD pair is slightly strengthening, continuing the development of a weak uptrend in the short term. The instrument is testing the level of 1.2770 for a breakout; however, there are no significant growth factors for the British currency on the market. Moreover, the pound is still under pressure from the UK data released last week. 

Retail Sales in July decreased by 1.2% after rising by 0.6% in the previous month, while analysts expected -0.5%, and in annual terms, the decline accelerated from -1.6% to -3.2%, which also significantly exceeded market forecasts at -2.1%. In addition, statistics on the House Price Index from the research company Rightmove Group Ltd. was published the day before, having decreased in August by 1.9% after -0.2% a month earlier. In annual terms, the indicator was -0.1% after a moderate increase of 0.5% in July. Even though the Consumer Price Index slowed to 6.8% year-on-year in July from 7.9% in June, experts are confident that the interest rate at the September meeting of the Bank of England will be adjusted from 5.25% to 5.50%, which can significantly increase the risks of recession.

Traders are in no hurry to open new positions in anticipation of tomorrow's publication of a block of macroeconomic statistics on business activity in the US and the UK. Forecasts suggest a reduction from 45.3 points to 45.0 points in the UK's Manufacturing PMI and from 51.5 points to 50.8 points in the Services PMI, while US data may turn out to be neutral or reflect cautious optimism.

During the week, the focus of investors' attention is the US statistics on the volume of Durable Goods Orders, as well as the annual Federal Reserve's Jackson Hole Economic Symposium, where, as expected, the prospects for monetary policy may be announced, since a significant part of the "hawks" still advocate the possibility of further increasing the cost of borrowing.

Support and resistance

On the D1 chart Bollinger Bands are trying to reverse into the ascending plane. the price range is expanding slightly, limiting the development of "bullish" sentiment in the near future. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, having approached the level of "80", reversed into a horizontal plane, indicating the risks of overbought pound in the ultra-short term.

Resistance levels: 1.2800, 1.2850, 1.2900, 1.2963.

Support levels: 1.2747, 1.2690, 1.2650, 1.2600.

Trading tips

Long positions can be opened after a breakout of 1.2800 with the target of 1.2850. Stop-loss — 1.2770. Implementation time: 2-3 days.

A rebound from 1.2800 as from resistance, followed by a breakdown of 1.2747 may become a signal for opening of short positions with the target at 1.2690. Stop-loss — 1.2790.