Current trend

After a significant decline last week, the GBP/USD pair is correcting upwards at 1.2716 amid a slowdown in the US currency and positive British macroeconomic statistics.

In May, the consumer price index rose by 0.3% MoM, almost meeting analysts’ expectations, contributing to the correction of the indicator from 2.3% to 2.0% YoY and continuing the trend of recent months, while the core value, excluding fuel and food prices, decreased from 3.9% to 3.5%. However, the likelihood that these data will influence the decision of Bank of England officials on monetary policy is quite low. Most likely, economists have already considered the trend and will keep the cost of borrowing around 5.25% to return inflation to the target of 2.0%. On Friday at 08:00 (GMT 2), the report on retail sales is due, which, according to forecasts, will be adjusted from –2.3% to 1.5% MoM and from –2.7% to –0.9% YoY. In addition, the June S&P Global manufacturing PMI may fall from 51.2 points to 51.0 points and the service PMI from 52.9 points to 53.0 points.

The American dollar is trading at 104.90 in USDX. Tomorrow, investors will pay attention to the housing market and employment market. Housing starts may increase from 1.36M to 1.38M, initial jobless claims may decrease from 242.0K to 235.0K, and continuous claims for the week of June 7 – from 1.82M to 1.81M.

Support and resistance

On the daily chart, the trading instrument is completing a rare candlestick pattern Three White Crows, which implementation is highly likely to occur downwards.

Technical indicators reverse downwards. Fast EMA on the Alligator indicator are approaching the signal line, and the AO histogram is forming correction bars, falling in the purchase zone.

Resistance levels: 1.2760, 1.2890.

Support levels: 1.2670, 1.2560.

Trading tips

Short positions may be opened after the price declines and consolidates below 1.2670, with the target at 1.2560. Stop loss is 1.2720. Implementation period: 7 days or more.

Long positions may be opened after the price grows and consolidates above 1.2760, with the target at 1.2890. Stop loss is 1.2700.