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LiteForex Analytics

LiteForex Analytics

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GBP/USD: pound is under the pressure of high inflation

Current trend

On Tuesday the pair was rapidly corrected to the level of 1.2845 (Fibonacci correction 61.8%). US dollar was supported by strong July Retail Sales data (in July the index grew by 0.6%) and new rumors upon the soon Fed’s interest rate rise. On the other hand, pound is under the pressure of June UK Consumer Price Index, which stayed at the same high level of 2.6%, as the fall of fuel prices was balance by the growth of food prices.

The long term maintenance of the high level of inflation raises concerns of market, as the earning index in the UK don’t keep pace with the Consumer Price Index growth, which leads to the impoverishing of the households, fall of retail sales and pressure on the GDP.

Today the Average Earnings data will be published in the UK, the index including bonus is expected to stay on the same level of 2.0% and index excluding bonus — on the level of 1.8% In this case the pair can decrease further. In addition, investors are waiting for the employment market data in the UK, which are expected to be more positive. The decrease of unemployment level from 5.9K to 3.7K is expected in June.

Support and resistance

Technically the pair is trading within the narrow sideways range of 1.2845 (Fibonacci correction 61.8%) and 1.2880 (Murray ), waiting for the employment and earnings data. In case of breakout of the upper border of the range the price can grow to the levels of 1.2930 (Fibonacci correction 50.0%, the middle line of Bollinger Bands) and 1.3005 (Fibonacci correction 38.2%, Murray ). The consolidation of the price below the level of 1.2845 can let it go down to the area of 1.2800 and 1.2750 (Fibonacci correction 61.8%).

Support levels: 1.2845, 1.2800, 1.2750.
Resistance levels: 1.2880, 1.2930, 1.3005.

Trading tips

Long positions can be opened after the breakout of the level of 1.2880 with the targets at 1.2930, 1.3005 and stop loss around 1.2840.
Short positions can be opened below the level of 1.2845 with the targets at 1.2800, 1.2750 and stop loss at 1.2880.

Read more analytic on LiteForex site https://www.litefore...forex-analysis/


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