Last week, the GBP/USD pair was growing notably amid weak macroeconomic statistics, released in the US, and a decline of investor demand for the USD. Yesterday, the market consolidated due to the official holiday in the US.
Today, UK consumer prices recorded the biggest decline in history, and the pair dropped by more than 140 points in return. Nevertheless, negative inflation is unlikely to affect the growth of British economy, but the investor demand for the GBP, in the given situation, will decline and the pair will continue falling.
On Wednesday, Retail Sales and key indices statistics for the US should be noted.
Support and resistance
In the medium term, the pair is likely to continue trading within a downward channel towards the levels of 1.5000, 1.4910. Technical indicators confirm this scenario: on the daily chart the price broke down the middle MA of Bollinger Bands indicator and headed to the lower MA at 1.5000. MACD indicates growing short interest.
Support levels: 1.5190, 1.5100, 1.5030, 1.5000, 1.4910, 1.4830, 1.4745.
Resistance levels: 1.5250, 1.5300, 1.5355, 1.5400, 1.5440, 1.5485, 1.5610.
Short positions can be opened from the current level and from the key resistance levels of 1.5250, 1.5300 with targets at 1.5000, 1.4910 and stop-loss above the level of 1.5300.