Review and dynamics
In the past two weeks the pair GBP/USD has been in the range of 1.3290 - 1.3060. Although at the July meeting the Bank of England decided to leave interest rates unchanged at the level of 0.5%, fundamental factors are in favor of the decline in the pair GBP/USD. On the weekly and monthly charts the indicators OsMA and Stochastic give signals to sell. The pair GBP/USD is in a descending channel on the weekly chart with the lower limit below the level of 1.2700.
The pair GBP/USD will remain below resistance levels of 1.3320 (ЕМА144) and 1.3440 (ЕМА200 on 4-hour chart) until interest rate decision by the Bank of England on Thursday.
If the rate is lowered, the pound will fall sharply in the currency market. The pair GBP/USD can break down support levels of 1.3360 and 1.2900 and go down to the lower limit of the descending channel on the weekly chart at the level of 1.2700. This is the most feasible scenario.
On the assumption that the interest rate in the UK will not be lowered and quantitative easing program will not be expanded in the UK, the pound will sharply go up in the currency market. It can break out resistance level of 1.3440 and continue to grow up to the level of 1.3630 (the lows of 2009, 2001, the closing price of "black Friday").
However, uncertainty about future prospects of the British economy after Brexit and expectations of easing of monetary policy in the country will put pressure on the Pound. At the same time, probability of the interest rate hike in the USA before the end of this year will increase downward pressure on the pair GBP/USD.
The pair GBP/USD is likely to decline in the medium-term.
Support levels: 1.3060, 1.2900, 1.2800 and 1.2700.
Resistance levels: 1.3290, 1.3440, 1.3500, 1.3630, 1.3670, 1.3700, 1.3800 and 1.3860.
Sell on the market. Stop-Loss: 1.3310. Take-Profit: 1.3120, 1.3060, 1.2900, 1.2800 and 1.2700.
Buy Stop: 1.3320. Stop-Loss: 1.3260. Take-Profit: 1.3400, 1.3500, 1.3630, 1.3700, 1.3800 and 1.3860.
In the descending channel
In the range of 1.3290 – 1.3060