During several weeks the pair is trading within a narrow sideways channel 1.5500-1.5680. Weak macroeconomic statistics does not allow the GBP to strengthen against the USD. Thus, on Monday, the British currency was going up, supported by high investor demand and positive data on Manufacturing PMI, but favorable US statistics set to nought all attempts made to strengthen by GBP.
On Tuesday, negative Construction PMI affected the pair. The indicator came lower than expected at 57.1 points, pushing the price down to the support level 1.5550.
Today, the pair received but failed to strengthen significantly due to the lowering Services PMI. US key indexes are expected to grow and are worth noting.
Major releases are due at the end of the week. Tomorrow, the Bank of England publishes its Interest Rate Decision and Asset Purchase Facility. Moreover, Industrial Production and Manufacturing Production statistics are released. As for the USA, Labor Market statistics are issued on Thursday and Friday.
Support and resistance
The pair fails to overcome key resistance levels and hit local highs due to fundamental factors and high demand for the American currency.
However, despite negative statistics, the GBP shows good dynamics and, if favorable data on key economic indicators is released and the demand for the currency grows, the British pound may rise to local highs 1.5870, 1.5935. Moreover, in the medium term, the price may reach the upper border of the upward range 1.6000, 1.6200.
The pair is still trading within a wide upward range and long positions are more preferable. In the short term, a correction to the lower border of the channel 1.5450 is possible followed by a growth.
In August and September, the demand for the American currency is likely to decrease, but in anticipation of the interest rate decision, the demand for the USD should rise again.
Support levels: 1.5550, 1.5500, 1.5450, 1.5400, 1.5335, 1.5230, 1.5180, 1.5100.
Resistance levels: 1.6580, 1.5800, 1.5870, 1.5935, 1.6000, 1.6070, 1.6200.
Long positions are preferable from the lower border of the upward channel 1.5500, 1.5450 with take-profit at 1.5870, 1.5935, 1.6000 and stop-loss at 1.5420.