Current trend

Amid the positive dynamics of the American currency, the GBP/USD pair is correcting at 1.2985.

The pound is weakening despite the recovery of the national economy. Thus, inflation returned to the Bank of England’s target range below 2.0% for the first time in several years. The September consumer price index did not change, which led to a slowdown in the year’s indicator from 2.2% to 1.7%. The core indicator, excluding food and fuel prices, decreased from 3.6% to 3.2%, the lowest since February.

The American dollar is trading in an uptrend at 103.30 in the USDX, although the reports on the lending sector did not meet analysts’ forecasts. This week, the Mortgage Bankers Association (MBA) 30-year mortgage rate reached the May 2023 level of 6.52%, as a result of which the mortgage market index fell from 277.5 points to 230.2 points, and the MBA mortgage lending indicator fell from –5.1% earlier to –17.0%.

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

Support and resistance

On the daily chart, the trading instrument moves between the first-order levels (I). After returning to the range with a repeated break of the first-order left resistance level (I) 1.3220, the price is preparing to continue its decline. Further dynamics will most likely develop in a poor downward trend, with the target at the crossroad of the right support of the second order (II) and the left support of the second order (II) 1.2823 in the near term and at the crossroad of the right support of the third order (III) and the left support of the third order (III) 1.2589 in the long term.

An alternative scenario is a reversal and growth with a return to the crossroad of the right resistance of the third order (III) and the left resistance of the third order (III) 1.3054, after which the price will head to the crossroad of the left resistance of the first order (I) and the right resistance of the first order (I) 1.3294.

Resistance levels: 1.3054, 1.3292.

Support levels: 1.2823, 1.2589.

Trading tips

Short positions may be opened after the price consolidates below 1.2823, with the target at 1.2589. Stop loss — 1.2900. Implementation period: 7 days or more.

Long positions may be opened after the price consolidates above 1.3054, with the target at 1.3292. Stop loss — 1.2970.