Last Friday the pair GBP/USD was traded in the sideways channel of 1.5835-1.5896. Yesterday, the pair had reached seven-month highs at the level of 1.5929 after the publication of the statement by the US FOMC. The US regulator has emphasised the necessity to achieve more significant improvements in the US economy, which will contribute to a gradual increase in the interest rate. The fact that the timing period of the interest rate increase had not specified was a disappointment to the investors, and the attractiveness of the USD has dropped.
On the other hand, demand for the British currency is growing due to the crisis in Greece. Athens cannot agree with the international creditors about the next tranche of the loan to IMF. If Greek government does not find funds for the next tranche, or does not reach agreement on restructure of the debt, it will bring the country to default and lead to the exit from EU.
Today, emergency summit of Eurozone will be held, where the officials will try to find a compromise on the Greek issue. Greece has ten days to come to agreement with the creditors.
This Tuesday, hearing on inflation will be held in the British Parliament. The results of this meeting will give indication about the time period when the Bank of England is going to raise interest rates.
Support and resistance
Resistance levels: 1.5929 (upper line of Bollinger bands), 1.6000 (important psychological level), 1.6100 (important psychological level).
Support levels: 1.5835 (yesterday’s lows), 1.5835 (Fibonacci retracement of 23.6%), 1.5650 (Fibonacci retracement of 38.2%), 1.5565 (Fibonacci retracement of 50%).
Long positions are advisable from the level of 1.5930 with the first target of 1.6000 and the next one at the level of 1.6100 and stop-loss at 1.5910. Sell positions can be opened below the level of 1.5830 with the targets of 1.5760 and 1.5660 and stop-loss at 1.5850.