Current trend

The GBP/USD pair is retreating from annual highs amid a stable trend of the American currency and is trading around 1.3101.

The positive dynamics of the pound are associated with the reaction of investors to Friday’s report on house prices from one of the country’s largest mortgage lenders, Halifax Bank plc. In August, it rose by 0.3% MoM after 0.9% earlier, exceeding the expected 0.2%, which allowed the indicator to accelerate to 4.3% YoY from 2.4% compared to 4.2%. Positive dynamics in the sector have been developing for two months. In addition, a decrease in the August mortgage rate from 8.03% to 7.83%, a low since July 2023, which stimulates demand for such borrowings from residents of the country, confirms the recovery of the industry. On Wednesday, the July gross domestic product (GDP) is due, which may be around 0.0%, and data on the dynamics of industrial production, which may slow from 0.8% to 0.3%.

The American dollar is trading at 101.20 in USDX. Investors are trying to compare Friday’s data on the labor market with earlier reports, which provides some support to the currency. Thus, the unemployment rate fell to 4.2% from 4.3% due to an increase in nonfarm payrolls by 142.0K instead of 89.0K growth a month earlier, and in the private nonfarm sector, the increase was 118.0K, higher than 74.0K previously. Average hourly earnings in August accelerated from 0.2% to 0.4% and from 3.6% to 3.8% against forecasts of 0.3% and 3.7%. By the end of the day, expectations regarding the volume of the expected interest rate cut by the US Fed in September remained virtually unchanged. The scenario with an indicator adjustment of –50 basis points is about 35.0%, while during the past week, the probability rose above 40.0%.

Support and resistance

On the daily chart, the trading instrument is moving away from the resistance line of the ascending channel 1.3180–1.2820.

Technical indicators are weakening the buy signal amid the correction: fast EMAs on the Alligator indicator are approaching the signal line, and the AO histogram is forming correction bars, falling in the buy zone.

Resistance levels: 1.3170, 1.3265.

Support levels: 1.3086, 1.2930.

Trading tips

Short positions may be opened after the price declines and consolidates below 1.3086, with the target at 1.2930. Stop loss — 1.3130. Implementation period: 7 days or more.

Long positions may be opened after the price grows and consolidates above 1.3170, with the target at 1.3265. Stop loss — 1.3130.