Current trend

During the Asian session, the GBP/USD pair is consolidating near 1.2700 and local lows from July 2, stabilizing after a rapid decline.

As for the recent statistics, it is worth highlighting the growth of business activity in all major sectors of the UK. Service and construction PMI have adjusted to 52.5 points and 55.3 points, respectively. It contributed to the increase in the composite indicator to 52.8 points from 52.3 points earlier and may have a positive effect on the GBP/USD pair. In turn, the July housing price indicator from one of the country’s largest mortgage lenders, Halifax Bank plc., added 1.6% from 2.3%, exceeding preliminary estimates of experts, and 0.8% MoM after a correction of –0.2% last month, while forecasts assumed growth of 0.3%. As for the American currency, it received minor support from investors after the publication of the Mortgage Business Association (MBA) report. The rate on 30-year mortgages fell to the May low of last year at 6.55%, acting as a driver of increased demand for consumer and mortgage loans. The USDX Index is holding around 102.70 today, above Monday’s low of 101.90, while American investors are preparing for the publication of statistics on the number of applications for unemployment benefits: current forecasts suggest a slight decrease from 249.0K to 240.0K.

Under these conditions, the continuation of the local decline in the GBP/USD pair looks like the most likely scenario.

Support and resistance

On the daily chart, the quotes are moving between the first-order levels (I). After entering a new range with the overcoming of the first-order left resistance level (I) 1.2800, the quotes are preparing to continue the decline. Further dynamics will develop in a poor downward trend, where the very close in price but distant in time, crossover of the right support of the second order (II) and the left support of the third order (III) 1.2647 is the immediate target. The long-term target is the crossover of the right support of the second order (II) and the left support of the first order (I) 1.2473.

An alternative scenario is a reversal and growth to the crossover of the right resistance of the third order (III) and the left resistance of the third order (III) 1.2718, after which the price can head to the crossover of the left resistance of the third order (III) and the right resistance of the second order (II) 1.2892.

Resistance levels: 1.2718, 1.2892.

Support levels: 1.2647, 1.2473.

Trading tips

Short positions may be opened after the price consolidates below 1.2647, with the target at 1.2473. Stop loss — 1.2700. Implementation period: 7 days or more.

Long positions may be opened after the price consolidates above 1.2718, with the target at 1.2892. Stop loss — around 1.2670.