Current trend

The GBP/USD pair is trading with near-zero dynamics, holding near 1.3130. Investors will focus on the publication of the September report on the US labor market today, which, as analysts hope, will not lead to a revision of forecasts regarding further easing of the US Federal Reserve's monetary policy.

Average Hourly Earnings are projected to slow down slightly month-on-month from 0.4% to 0.3% and remain unchanged year-on-year at 3.8%, while Nonfarm Payrolls are forecast to decline from 142.0 thousand to 140.0 thousand and the Unemployment Rate is expected to hold at 4.2%. At the same time, the probability that the regulator will decide to adjust the interest rate in November by only –25 basis points after –50 basis points in September is now 65.0%, according to the Chicago Mercantile Exchange (CME) FedWatch Tool.

Today at 10:30 (GMT 2), British investors will turn their attention to the Construction PMI: forecasts suggest a decrease from 53.6 points to 53.1 points. Also, at 14:55 (GMT 2), there will be a speech by Bank of England representative Huw Pill. In addition, markets are assessing the business activity data published the day before: the S&P Global Services PMI fell from 52.8 points to 52.4 points in September with neutral forecasts, and the Composite PMI fell from 52.9 points to 52.6 points. The decline in business activity puts pressure on financial authorities to further ease monetary parameters, even as inflation risks show a steady weakening.

In turn, the Governor of the British regulator, Andrew Bailey, in an interview with The Guardian, said that officials are closely monitoring the development of the situation in the Middle East, in particular, any changes in oil prices that could act as a catalyst for inflation, and depending on this, among other things, they will make decisions on monetary policy, so steps to adjust the cost of borrowing may be more "aggressive". Bailey's comments sent the pound's value plummeting against the dollar and the euro, at its sharpest pace since December 2022. The Bank of England meets in November and December this year, and investors are hoping that borrowing costs will be adjusted by as little as –25 basis points if inflation continues to slow towards the 2.0% target. The regulator cut borrowing costs from 5.25% to 5.00% in August for the first time in more than four years.

Support and resistance

On the daily chart Bollinger Bands are trying to reverse horizontally. The price range is slightly expanding; however, it fails to catch the surge of the "bearish" sentiment at the moment. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic shows similar dynamics; however, the indicator is located close to its lows, indicating the risks of pound being oversold in the ultra-short term.

Resistance levels: 1.3150, 1.3200, 1.3250, 1.3300.

Support levels: 1.3100, 1.3050, 1.3000, 1.2948.

Trading tips

Short positions may be opened after a breakdown of 1.3100 with the target at 1.3000. Stop-loss — 1.3150. Implementation time: 2-3 days.

A rebound from 1.3100 as from support followed by a breakout of 1.3150 may become a signal for opening long positions with the target at 1.3250. Stop-loss — 1.3100.