Current trend

The GBP/USD pair is developing a "bullish" trend, testing 1.2875 and renewing the highs from April 22 last year. Investors are in no hurry to open new trading positions, evaluating data on the UK labor market.

In particular, the Average Earnings Excluding Bonus in May remained at 7.3%, and Average Earnings Including Bonus increased from 6.7% to 6.9%, while the ILO Unemployment Rate adjusted from 3.8% to 4.0%, contributing to an increase in inflation and the continuation of the "hawkish" course of monetary policy by the Bank of England. Also during the day the June estimate of the growth rate of Gross Domestic Product (GDP) from the National Institute of Economic and Social Research (NIESR) will be presented, from which analysts do not expect changes from the current value of 0.0%.

Tomorrow, the focus of investors will be the publication of the minutes of the June meeting of the Bank of England, as well as the reports of the Financial Policy Committee (FPC). In addition, June data on inflation in the US will be presented: forecasts suggest a slowdown in the annual Consumer Price Index from 4.0% to 3.1%, and in monthly terms, on the contrary, a weak growth is expected from 0.1% to 0.3%. On Thursday, traders will evaluate May statistics on UK GDP growth rates, as well as Industrial Production volumes. Experts predict a slowdown in the national economy by 0.4% after growing by 0.2% in the previous month.

In addition, the two-day visit of Indian Minister of Commerce and Industry Piyush Goyal to London will end today, during which the results of negotiations on the preparation of a mutually beneficial partnership between countries on free trade, which will affect 26 different areas, will be summed up. The UK authorities have already entered into similar agreements with Japan, New Zealand and Australia in an attempt to offset the decline in trade with the EU after Brexit in January 2020. Experts are confident that if successful, the British economy will receive a driver for growth: this year, bilateral turnover has already exceeded 20.36 billion dollars compared to 17.50 billion dollars a year earlier.

Support and resistance

Bollinger Bands in D1 chart show moderate growth. The price range is expanding but it fails to conform to the surge of "bullish" sentiments at the moment. MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic demonstrates similar dynamics; however, the indicator line is located near its highs, signaling the risks of the pound being overbought in the ultra-short term.

Resistance levels: 1.2900, 1.3000, 1.3100, 1.3150.

Support levels: 1.2847, 1.2800, 1.2747, 1.2690.

Trading tips

Long positions can be opened after a breakout of 1.2900 with the target of 1.3000. Stop-loss — 1.2847. Implementation time: 1-2 days.

A rebound from 1.2900 as from resistance, followed by a breakdown of 1.2847 may become a signal for opening of new short positions with the target at 1.2747. Stop-loss — 1.2900.