GBP/USD: ambiguous dynamics

Current trend

GBP is showing ambiguous dynamics at the end of the trading week, consolidating near 1.2950. Yesterday, investors took a lead from the published minutes of the Bank of England meeting, which provoked a sharp decline in the instrument during the day. As expected, the regulator made no changes into the monetary policy parameters. The rate remained at 0.1%, and the asset purchase facility remained at the level of GBP 745 billion. At the same time, it became known that members of the board were considering the potential possibility of applying negative interest rates, if the economic situation so requires. Investors reacted to such statements with a wave of selling; however, by the end of the trading session on Thursday, GBP still managed to win back most of its losses.

Additional pressure on the instrument remains due to the uncertainty surrounding Brexit. The bill proposed by the British Prime Minister effectively thwarted the negotiation process, which was already not particularly optimistic.

Support and resistance

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is narrowing, reflecting the emergence of the uptrend in the short term. MACD indicator is growing preserving a weak buy signal (located above the signal line). Stochastic keeps its upward direction but is approaching its highs, which reflects risks of the overbought GBP in the ultra-short term.

To open new positions, it is necessary to wait for the trade signals to become clear.

Resistance levels: 1.3000, 1.3052, 1.3100, 1.3147.

Support levels: 1.2950, 1.2900, 1.2850, 1.2761.

Trading tips

To open long positions, one can rely on the breakout of 1.3000. Take-profit – 1.3100. Stop-loss – 1.2950.

The breakdown of 1.2900 may serve as a signal to new sales with the targets at 1.2800–1.2761. Stop-loss – 1.2970.

Implementation time: 2-3 days.