Current trend

During the morning session, the GBP/USD pair is falling, testing 1.2560 for a breakdown. The asset may end the week with a renewal of the local lows of June 13 against poor UK macroeconomic statistics.

Thus, manufacturing PMI in August amounted to 42.5 points compared to 45.3 points earlier, which was the lowest since May 2020, and service PMI fell from 51.5 points to 48.7 points, increasing the correction of the composite index from 50.8 to 47.9 points, which weakening the pound.

The US dollar continued to rise, reaching 104.100 in the USD Index: initial jobless claims amounted to 230.0K, down from 240.0K last week, as a result of which the total claims corrected from 1.711M to 1.702M. Also, core durable goods orders in July rose by 0.5% after rising 0.2% earlier, continuing the positive trend since the beginning of the summer.

Support and resistance

On the daily chart, the trading instrument is falling, working out the global Head and shoulders reversal pattern, breaking the Neckline of 1.2600.

Technical indicators hold a sell signal: fast EMAs on the Alligator indicator widen the oscillation range, and the AO histogram forms downward bars, falling in the sell zone.

Resistance levels: 1.2660, 1.2850.

Support levels: 1.2500, 1.2280.

Trading tips

Short positions may be opened after a reversal, reduction, and consolidation of the price below 1.2500 with the target at 1.2280. Stop loss – 1.2600. Implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 1.2660 with the target at 1.2850. Stop loss – 1.2600.