Current trend

The GBP/USD pair has been demonstrating negative dynamics for the third week, reaching 1.2610 under pressure from political uncertainty in the UK.

The country will hold a general parliamentary election next week, which could lead to a change in both the cabinet and economic policy, in connection with which the Bank of England officials have refused to take active action, keeping the interest rate at 5.25%. However, since the May consumer price index returned to the target of 2.0%, the regulator’s economists may switch to “dovish” rhetoric in August, ahead of the US Fed, ensuring the weakening of the pound in the medium term.

The American currency is strengthening amid uncertainty about the further actions of the financial authorities, allowing for long-term preservation of the peak cost of borrowing and even their increase if necessary. On the other hand, tomorrow at 14:30 (GMT 2), the May core index of private consumption expenditure is due, which may decrease from 2.8% to 2.6%. It will soften the regulator’s officials’ position, but this year’s monetary policy adjustment remains doubtful.

Support and resistance

The trading instrument has consolidated below 1.2695 (Murrey level [8/8]), which will allow it to reach the area of ​​1.2573 (Murrey level [7/8]) and 1.2451 (Murrey level [6/8]). In case of consolidation above 1.2720, the quotes may return to the area of ​​1.2817 (Murrey level [ 1/8]) and 1.2890 (Fibonacci correction 61.8%), which is less likely.

Technical indicators point to a decline. Bollinger Bands and Stochastic reverse downwards, the MACD histogram is near the zero line, and its volumes are insignificant.

Resistance levels: 1.2720, 1.2817, 1.2890.

Support levels: 1.2573, 1.2451.

Trading tips

Short positions may be opened from 1.2630, with the targets at 1.2573, 1.2451, and stop loss 1.2675. Implementation period: 5–7 days.

Long positions may be opened above 1.2720, with the targets at 1.2817, 1.2890, and stop loss 1.2650.