The GBP/USD currency pair is still showing negative dynamics. This week, the pound has updated the annual lows and approached the $1.29 mark. The currency of Great Britain was under pressure due to the release of weak data on business activity and comments by the head of the Bank of England Carney.
It should be recalled that last week the Bank of England raised its key interest rate by 25 basis points to 0.75%. At the same time, the pound continued to lose ground against the US dollar. The head of the Central Bank said that raising the interest rate once a year is a "universal practice". The official expressed concerns about the consequences of Brexit. The regulator will not consider raising the key interest rate if progress in negotiations on Brexit is not achieved.
This week, investors' attention will be focused on important economic reports from the UK. On Friday, August 10, the National Statistical Office of Great Britain will publish preliminary data on the country's GDP for the second quarter. The gross domestic product is a key indicator of the economy health, which has a strong impact on the exchange rate of the national currency.
Experts expect that in the second quarter the growth of the UK economy will accelerate and count to 0.4% compared with the previous value of 0.2%; in annual terms – 1.3%. We recommend paying attention to the difference between the actual and the forecasted values.
- Support levels: 1.29250, 1.28500
- Resistance levels: 1.30000, 1.30800, 1.31500
Currently, the GBP/USD quotes are consolidating. The key support and resistance levels are: 1.29250 and 1.30000 respectively. Indicators point to the power of sellers:
- The price has fixed below 50 MA and 200 MA;
- The MACD histogram is located in the negative zone.
Nevertheless, we recommend you to open positions from the key levels.
If the price fixes below the support level of 1.29250, we expect a further drop in GBP/USD. The movement is tending to 1.28500-1.28000.
Alternative option. If the UK GDP statistics prove to be optimistic, the GBP/USD currency pair may again test the 1.30500-1.30800 mark.
Confirmations and entry points to the market should be looked for on lower timeframes. When following the positions, we recommend using a trailing stop.