empty
02.08.2023 09:28 AM
Overview of the GBP/USD pair. August 2nd. The market is skeptical about the meeting of the Bank of England

This image is no longer relevant

The GBP/USD currency pair experienced a decline and closed near the Murray level of "1/8"-1.2756 by the end of the day. The pair remains below the moving average line, indicating a continuing downward trend. However, the uncertainty lies in the upcoming Bank of England meeting, which could trigger a significant market reaction, impossible to predict in advance. This uncertainty arises because we need to know the decisions and statements that will be made.

While the decision on the interest rate is already known, questions regarding Andrew Bailey's rhetoric, the number of future rate hikes, and the level of support from the Monetary Policy Committee still need to be answered. These factors will be addressed during the Bank of England's meeting on Thursday.

The market is moderately selling the pound, but the reasons for this may vary. It may be due to skepticism about the BOE's aggressive stance being maintained, the anticipation of prolonged and strong growth, or simply a technical correction following the pound's recent surge in value.

Though it seems logical for the pound to depreciate, past events have shown that unexpected outcomes are possible. For instance, two months ago, the pound's growth appeared unusual, but the Bank of England raised the rate, even accelerating its pace at the last meeting. Another surprise could happen during this week's meeting, with a 0.5% tightening, although it is less likely.

The market eagerly awaits signals from the Bank of England. Additionally, labor market reports in the United States will be vital. Despite concerns about the American economy, it has remained resilient, with no signs of recession, rising unemployment, or a declining labor market despite the Federal Reserve's high national debt and cash issuance.

These factors support a strengthening dollar compared to the pound. The current inertial trend may persist until the BOE signals the end of the tightening cycle. Once this signal is received, there will be no basis for further pound purchases.

Regarding the labor market reports in the US, weak values could exert temporary pressure on the dollar but are unlikely to have a significant long-term impact. With the inflation rate nearly 2%, the Fed may consider easing its monetary policy next year. If the US labor market statistics are strong, the dollar may experience growth after a prolonged decline.

This image is no longer relevant

The average volatility of the GBP/USD currency pair over the last five trading days is 114 pips, considered "high" for this pair. On Wednesday, August 2nd, we anticipate movement between 1.2656 and 1.2884. A reversal of the Heiken Ashi indicator upwards will indicate a new surge in the upward movement.

Nearest support levels:

S1 - 1.2756

S2 - 1.2695

S3 - 1.2634

Nearest resistance levels:

R1 - 1.2817

R2 - 1.2878

R3 - 1.2939

Trading recommendations:

In the 4-hour timeframe, the GBP/USD pair continues to be below the moving average. Short positions with targets at 1.2695 and 1.2634 are currently relevant and should be held until the Heiken Ashi indicator reverses upwards. Long positions can be considered if the price consolidates above the moving average, with targets at 1.2878 and 1.2939.

Explanations for the illustrations:

Linear regression channels - help determine the current trend. If both channels are directed in the same direction, it indicates a strong current trend.

Moving average line (settings 20.0, smoothed) - determines the short-term trend and direction for trading.

Murray levels - target levels for movements and corrections.

Volatility levels (red lines) - the probable price channel in which the pair is expected to trade within the next day, based on current volatility indicators.

CCI indicator - its entry into the oversold area (below -250) or overbought area (above +250) indicates an upcoming trend reversal in the opposite direction.

Paolo Greco,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

The Euro Sees Light at the End of the Tunnel

The dollar is often viewed as the currency of pessimists, gaining strength during uncertain times for the global economy. Recent tariff threats from Donald Trump have contributed to a bleak

Marek Petkovich 23:55 2025-01-14 UTC+2

The Pound is Oversold, but No Buy Signals Yet: GBP/USD Overview

The economic outlook for the UK has recently come under scrutiny. According to Deloitte's quarterly survey of financial directors from the country's largest companies, hiring is expected to decline

Kuvat Raharjo 23:55 2025-01-14 UTC+2

EUR/USD: Analysis and Forecast

Today, the EUR/USD pair shows signs of recovery following an overnight rebound from the 1.0180–1.0175 range, the lowest level since November 2022 The recovery is supported by a modest decline

Irina Yanina 12:15 2025-01-14 UTC+2

What to Pay Attention to on January 14? A Breakdown of Fundamental Events for Beginners

The macroeconomic calendar for Tuesday is quite sparse. The only report of interest is the Producer Price Index (PPI) in the U.S., which is expected to have minimal significance

Paolo Greco 07:08 2025-01-14 UTC+2

GBP/USD Overview: January 14 – The Pound Continues to Sink Like a Stone to the Bottom of the Mariana Trench

The GBP/USD currency pair experienced a decline on Monday, which was expected. Over the past five trading days, the British pound has lost 450 pips, and in the last three

Paolo Greco 02:14 2025-01-14 UTC+2

EUR/USD Overview: January 14 – The Euro Continues Its Decline Toward Parity

On Monday, the EUR/USD currency pair continued to trade lower—what else could it do? This situation reminds us of last year when we frequently noted that the euro was overbought

Paolo Greco 02:14 2025-01-14 UTC+2

GBP/USD: pound sterling in distress ahead of crucial news

GBP/USD opens a new trading week on a bearish note. The GBP/USD pair began the week with a bearish tone, continuing its downward move without any corrective pullback and settling

Irina Manzenko 13:29 2025-01-13 UTC+2

USD/JPY: Analysis and Forecast

Today, the Japanese yen is making every effort to maintain its two-day growth against the US dollar. However, its strength is waning due to uncertainties surrounding the Bank of Japan's

Irina Yanina 11:36 2025-01-13 UTC+2

EUR/USD: Inflation, Inflation, and More Inflation

This week is crucial for EUR/USD traders, as key U.S. inflation data will be released shortly. These reports will not only influence the outcome of January's Federal Reserve meeting—an event

Irina Manzenko 05:24 2025-01-13 UTC+2

GBP/USD Review: Weekly Preview – The Pound Edges Closer to 1.1800

The GBP/USD pair continued its downward movement on Friday. While Friday's drop can be attributed to strong U.S. labor market and unemployment data, earlier declines were blamed on the "bond

Paolo Greco 05:24 2025-01-13 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.