Investors expect the continuation of the dovish course of monetary policy. At the beginning of the month, Bank of England officials adjusted the interest rate to 4.00%, despite the fact that almost half of them opposed such a move. Among them was Monetary Policy Committee member Catherine Mann, who stated last Tuesday that she sees strong reasons to keep the rate unchanged for a long period but is ready for a sharp cut if signals of economic slowdown appear. She also noted that the inflationary risks highlighted by the regulator in May are already beginning to materialize. Meanwhile, according to the Confederation of British Industry (CBI), the retail sales volume index in August was –32.0 points compared to –34.0 points in the previous month, against forecasts of –26.0 points. In turn, the number of registered vehicles fell 26.7% month-on-month and 5.0% year-on-year, compared with –27.5% and –6.7% earlier.
As for the US dollar, its quotes are trying to recover, trading around 97.80 in the USDX during the Asian session amid stable signals regarding the Federal Reserve’s monetary policy outlook. Market participants continue to watch the Fed’s rhetoric in light of the dismissal of board member Lisa Cook: she has already filed a lawsuit in a federal court in Washington, challenging President Donald Trump’s attempt to remove her. Against this backdrop, investors largely ignored GDP and labor market data. The US economy grew 3.3% in Q2 after –0.5%, exceeding expectations of 3.0%, while initial jobless claims fell to 229K from 234K, reducing the total number of beneficiaries from 1.961M to 1.954M.
Support and Resistance Levels
On the daily chart, the instrument is correcting, holding slightly below the resistance line of the descending channel with dynamic boundaries of 1.3500–1.3000.
Technical indicators have turned upward again and issued a new buy signal: the fast EMAs on the Alligator indicator are slightly above the signal line, while the AO histogram is forming new corrective bars, moving into the buy zone.
Support levels: 1.3410, 1.3140.
Resistance levels: 1.3570, 1.3790.
Trading Scenarios
If the corrective growth continues and the price consolidates above resistance at 1.3570, buy positions with a target of 1.3790 will be relevant. Stop-loss — 1.3500. Implementation time: 7 days or more. This outlook aligns with the GBP/USD forecast for the week.
If a reversal occurs and the price consolidates below support at 1.3410, selling positions with a target of 1.3140 will be relevant. Stop-loss — 1.3500.
Scenario
- Timeframe: Weekly
- Recommendation: BUY STOP
- Entry Point: 1.3570
- Take Profit: 1.3790
- Stop Loss: 1.3500
- Key Levels: 1.3140, 1.3410, 1.3570, 1.3790
Alternative Scenario
- Recommendation: SELL STOP
- Entry Point: 1.3410
- Take Profit: 1.3140
- Stop Loss: 1.3500
- Key Levels: 1.3140, 1.3410, 1.3570, 1.3790