Current trend
This week, the GBP/USD pair reached 4-month highs around 1.4220 but then corrected, having lost the gained positions.
GBP came under pressure after the publication of April inflation data, which recorded its growth by 0.6% MoM and by 1.5% YoY. Representatives of the Bank of England believe that the strengthening will be temporary and will not exceed 2.5% this year, and therefore the monetary policy will not be adjusted. However, many investors fear that officials are wrong and will not be able to take the necessary measures to prevent overheating of the economy. Also, GBP is under pressure from fears of a new worsening of the epidemic situation in the country, which may threaten the further opening of the economy. British government expert Andrew Hayward noted in an interview with the BBC that the third wave of coronavirus in the country, caused by the Indian strain, has already begun. So far, it is local but the rate of spread of the disease may well require new quarantine measures.
USD strengthened after the officials of the US Federal Reserve allowed the possibility of discussing the adjustment of the volume of purchases by the regulator of assets if the economy approaches the targets for employment and inflation. However, in general, the minutes of the Open Market Committee (FOMC) did not arouse enthusiasm among traders since officials had previously stated that monetary tightening was possible but only after some time and based on a large amount of collected data.
Support and resistance
Now, the price is testing 1.4099 (Murrey ), which breakdown allows a correction to the level of 1.4000 (the middle line of Bollinger bands). A new breakout of 1.4160 (Murrey ) allows growth to 1.4220 (Murrey ) and 1.4282 (Murrey ). In general, the uptrend remains, as evidenced by the upward reversal of Bollinger bands and the MACD growth in the positive zone.
Resistance levels: 1.4160, 1.4220, 1.4282.
Support levels: 1.4099, 1.4000.
This week, the GBP/USD pair reached 4-month highs around 1.4220 but then corrected, having lost the gained positions.
GBP came under pressure after the publication of April inflation data, which recorded its growth by 0.6% MoM and by 1.5% YoY. Representatives of the Bank of England believe that the strengthening will be temporary and will not exceed 2.5% this year, and therefore the monetary policy will not be adjusted. However, many investors fear that officials are wrong and will not be able to take the necessary measures to prevent overheating of the economy. Also, GBP is under pressure from fears of a new worsening of the epidemic situation in the country, which may threaten the further opening of the economy. British government expert Andrew Hayward noted in an interview with the BBC that the third wave of coronavirus in the country, caused by the Indian strain, has already begun. So far, it is local but the rate of spread of the disease may well require new quarantine measures.
USD strengthened after the officials of the US Federal Reserve allowed the possibility of discussing the adjustment of the volume of purchases by the regulator of assets if the economy approaches the targets for employment and inflation. However, in general, the minutes of the Open Market Committee (FOMC) did not arouse enthusiasm among traders since officials had previously stated that monetary tightening was possible but only after some time and based on a large amount of collected data.
Support and resistance
Now, the price is testing 1.4099 (Murrey ), which breakdown allows a correction to the level of 1.4000 (the middle line of Bollinger bands). A new breakout of 1.4160 (Murrey ) allows growth to 1.4220 (Murrey ) and 1.4282 (Murrey ). In general, the uptrend remains, as evidenced by the upward reversal of Bollinger bands and the MACD growth in the positive zone.
Resistance levels: 1.4160, 1.4220, 1.4282.
Support levels: 1.4099, 1.4000.