The British economy grew by 0.4% in June, up from –0.1% in May, and 0.3% growth in Q2 against a forecast of 0.1%. The annual GDP figure stood at 1.2%, up from 1.3% in the previous period, although analysts expected it to be 1.0%. The main driver behind the positive growth was the manufacturing sector, which increased by 0.7% in June after a –1.3% contraction in the previous month, with a 0.2% annual increase. As a result, the Bank of England had sufficient arguments to lower the interest rate to 4.00%, and further monetary easing is expected by the end of the year if the labor market remains stable.
As for the US dollar, its quotations are currently at 97.92 in USDX, under pressure from signals regarding a potential rate cut by the US Federal Reserve. Previously, investor concerns were raised by the labor market data: unemployment rose to 4.2% in July from 4.1% in June, and the number of jobs increased by 73,000, although the forecast was for a 110,000 rise. However, the number of initial unemployment claims fell from 227,000 to 224,000, reducing the total number of people receiving government aid from 1.968 million to 1.953 million. A positive report on the Producer Price Index, which increased by 0.9% in July after zero change in the previous month, and the annual rate accelerated to 3.3%, much higher than the expected 2.5%, was also released.
Support and Resistance Levels
On the daily chart, the instrument is slightly correcting, staying just below the support line of the rising channel with boundaries of 1.3800–1.3400, which was breached in late July.
Technical indicators have reversed again and issued a new buy signal: fast EMAs on the "Alligator" indicator have crossed the signal line from below, and the AO histogram is forming new correction bars, entering the buy zone.
Support Levels:
- 1.3460
- 1.3200
Resistance Levels:
- 1.3630
- 1.3790
Trading Scenarios
In the case of continued corrective growth, and if the price consolidates above the resistance level of 1.3630, buy positions with a target of 1.3790 are recommended. Stop loss — 1.3530. Expected timeframe: 7 days or more.
If the price continues to decline and consolidates below the support level of 1.3460, sell positions with a target of 1.3200 are recommended. Stop loss — 1.3550.
Scenario
Timeframe: Weekly
Recommendations: BUY STOP
Entry Point: 1.3630
Take Profit: 1.3790
Stop Loss: 1.3530
Key Levels: 1.3200, 1.3460, 1.3630, 1.3790
Alternative Scenario
Recommendations: SELL STOP
Entry Point: 1.3460
Take Profit: 1.3200
Stop Loss: 1.3550
Key Levels: 1.3200, 1.3460, 1.3630, 1.3790