GBP/USD: Price Indices And Low Inflation
Mayzus | Oct 13, 2015 11:39AM ET
Today, price indices, reflecting the inflation rate, were published in the UK. Earlier. Retail sales statistics indicated growth, but the GBP/USD pair declined. Nevertheless, since the opening of the European session, the pair has been strengthening.
Last week, the Bank of England decided to keep its monetary policy unchanged. The Regulator expects inflation to remain below the level of 1% during 4-6 months. GDP growth in the third quarter was 0.6% from 0.7% in the second quarter.
The possible timing of a rate hike in the UK has shifted to the middle of 2016; however, if the Federal Reserve decides to keep its interest rate unchanged, the central banks of the eurozone and the UK may face the necessity of loosening their monetary policies.
The GBP/USD pair is at the resistance level of 1.5380 (ЕМА50 on the daily chart), after the breakout of which it may grow to 1.5440 (ЕМА144), 1.5485 (ЕМА200 on the daily chart).
The breakdown of the support levels of 1.5340 (ЕМА200), 1.5315(ЕМА144 on the 4-hour chart) and 1.5290 would accelerate the fall to the nearest target of 1.5230 (23.6% Fibonacci) and further to September lows and the lower border of a downward channel 1.5110.
On the 4-hour chart, OsMA and Stochastic indicators recommend short positions. On the daily chart, Stochastic is in the overbought zone and is starting indicating a reversal to short positions; however, there are no clear sell signals yet.
According to the indicators on the weekly and monthly charts, the pair is likely to continue declining.
- Support levels: 1.5340, 1.5315, 1.5290.
- Resistance levels: 1.5380, 1.5440, 1.5485.
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