Current trend

After a significant rise last week, the GBP/USD pair is holding at 1.2968 amid a weakening US currency.

The pound is neutral after the publication of the consumer price index, which was 2.0% in June, confirming the dynamics of the previous month and, for the first time in several years, consolidating within 1.5–2.0%. The core indicator, which does not include fuel and food, also remained at 3.5% YoY and decreased from 0.5% to 0.2% MoM. Keeping inflation within the Bank of England’s target range will allow officials to begin easing monetary policy. At the meeting on August 1, they may adjust the interest rate from 5.25% to 5.00%.

The American dollar is trading at 103.80 in USDX as a result of a neutral reaction of investors to yesterday’s macroeconomic statistics. The core retail sales, excluding cars, rose from 0.1% to 0.4%. However, the main indicator remained at 0.3% MoM, slowing the value from 2.59% to 2.28% YoY, against which US Fed officials may postpone the transition to a “dovish” course. On the other hand, yesterday, the head of the department, Jerome Powell, said that the regulator would not focus on achieving the 2.0% inflation target to begin easing monetary policy, noting that high interest rates worked with large time lags and expecting a slowdown in the consumer price growth dynamics, the government could put excessive pressure on the economy.

Today, traders focus on the housing market reports, the weakest sector of the US economy. Analysts expect the volume of new home construction to increase from 1.277M to 1.300M and the number of building permits from 1.399M to 1.400M.

Support and resistance

On the daily chart, the trading instrument is approaching the resistance line of the ascending channel with boundaries of 1.3050–1.2740.

Technical indicators are reversing upwards: fast EMA on the Alligator indicator are moving away from the signal line, and the AO histogram is forming correction bars, rising in the buy zone.

Resistance levels: 1.3010, 1.3170.

Support levels: 1.2910, 1.2740.

Trading tips

Long positions may be opened after the price rises and consolidates above 1.3010, with the target at 1.3170. Stop loss — 1.2940. Implementation period: 7 days or more.

Short positions may be opened after the price falls and consolidates below 1.2910, with the target at 1.2740. Stop loss — 1.2970.