At the end of December, the GBP/USD pair reached its highest level in five months near the mark of 1.2827, but then fell by 220 points.
In the first week of the new year, the pound received new support from published higher data on business activity in the UK, as well as lending statistics (consumer lending volume increased in November by +2.005 billion pounds instead of the forecasted +1.4 billion pounds).
At the beginning of this week, the GBP/USD pair rose to a local 7-day high of 1.2770.
Overall, the pound maintains a bullish impulse, also trading successfully in the main cross-pairs, while market participants await new steps from the Bank of England in its fight against high inflation (UK inflation data will be published on Wednesday next week at 07:00 GMT).
In the previous reporting month (November), consumer inflation growth slowed to -0.2% (+3.9% annually). Nevertheless, the data indicate still high inflationary pressure. But that's for next week. If the expected macro data from the U.S. on Thursday, including fresh inflation data, turn out to be strong, then we should expect a strengthening of the dollar.
In this case, a breakdown of the important short-term support level of 1.2705 (200 EMA on the 1-hour chart) may signal the resumption of short positions on the pair.
The breakdown of the important short-term support level of 1.2625 (200 EMA on the 4-hour chart) and the local support level of 1.2610 will be a confirming signal in favor of short positions.
In case of further decline, a break below the key support levels 1.2500 (50 EMA on the weekly chart, 144 EMA on the daily chart), 1.2470 (200 EMA on the daily chart) will signal GBP/USD's transition into the medium-term bear market zone.
If negative dynamics prevail, GBP/USD will head further into the downward channel on the weekly chart, the lower boundary of which is near the local support levels 1.1920, 1.1800.
In an alternative scenario, the price will overcome the zone of key resistance levels 1.2735 (200 EMA on the weekly chart), 1.2770 (50 EMA on the monthly chart) and head towards the 2023 high, reached in December at 1.2827, with the prospect of further growth. This, in turn, will mean GBP/USD's entry into the long-term bull market zone, making long-term long positions relevant.
Support levels: 1.2705, 1.2700, 1.2625, 1.2610, 1.2600, 1.2585, 1.2500, 1.2470, 1.2400
Resistance levels: 1.2735, 1.2770, 1.2800, 1.2827, 1.2900, 1.2995, 1.3100, 1.3140, 1.3200
Trading Scenarios
Main scenario: Sell Stop 1.2685. Stop-Loss 1.2755. Targets 1.2625, 1.2610, 1.2600, 1.2585, 1.2500, 1.2470, 1.2400
Alternative scenario: Buy Stop 1.2755. Stop-Loss 1.2685. Targets 1.2770, 1.2800, 1.2827, 1.2900, 1.2995, 1.3100, 1.3140, 1.3200
'Targets' correspond to support/resistance levels. This does not mean that they will necessarily be reached, but can serve as a guide when planning and placing your trading positions.
