A serious borrowing cost adjustment from the Bank of England will support the pound, making it more attractive against its other major competitors in the foreign exchange market.
As of writing, the GBP/USD currency pair was trading near the 1.2620 level, sharply declining after the release (at 12:30 GMT) of the final assessment of the U.S. GDP for the first quarter and the weekly U.S. labor market data on unemployment claims.
Both indicators turned out better than forecasted and previous values, which triggered a sharp strengthening of the dollar, which had been weakening at the beginning of today's trading session.
GBP/USD also declined in response to this publication. A break below the important short-term support level of 1.2594 (200 EMA on the 4-hour chart) could trigger further decline towards the significant support level of 1.2545 (50 EMA on the daily chart).
When assessing the pair's dynamics in the medium term, above the support levels of 1.2355 (144 EMA on the daily chart) and 1.2330 (200 EMA on the daily chart), this decline is currently only a correction within the upward medium-term trend and channel on the GBP/USD daily chart. In this case, the decline to the support levels of 1.2600, 1.2594, and 1.2545 can be seen as an opportunity to increase long positions.
A break above the resistance levels of 1.2650 (144 EMA on the daily chart) and 1.2700 (200 EMA on the 1-hour chart) will direct the pair towards the key long-term resistance levels of 1.2800 (200 EMA on the weekly chart) and 1.2848 (50 EMA on the monthly chart). Their breakout, in turn, will lead the pair into the zone of a long-term bullish market, heading towards the strategic resistance level of 1.4335 (200 EMA on the monthly chart), separating the GBP/USD global bearish market from the bullish one.
In an alternative scenario, the price will break below the support level of 1.2545, heading towards the key support levels of 1.2355 and 1.2330, from which we can expect another rebound and a resumption of the GBP/USD's upward movement. The first signal to implement this scenario would be a break below the support at 1.2594.
Support levels: 1.2594, 1.2545, 1.2500, 1.2400, 1.2335, 1.2330, 1.2300
Resistance levels: 1.2700, 1.2800, 1.2848, 1.3900, 1.4335
