GBP/USD: waiting for interest rate decisions _11/07/2016

Trading recommendations

Sell ​​in the market. Stop-Loss 1.3010. Take-Profit 1.2800, 1.2700, 1.2600

Buy Stop 1.3040. Stop-Loss 1.2980. Take-Profit 1.3100, 1.3230, 1.3430, 1.3600, 1.3670, 1.3700, 1.3800


Technical analysis

The market is still dominated by a tendency to selling the pound. Reducing interest rate expectations in the UK on Thursday (11:00 GMT) further enhances the position bears a pound.

Because of the strong pressure of the fundamental factors speak now about how any serious restoration pound position in the foreign exchange market is premature. GBP / USD pair has lost to date 16%, down from the level close to the level of 1.5000 on the results of the referendum and the decision of the country's population to withdraw Britain from the EU.

Price per pair is 800 points below the minimum 15-year-old, which roughly corresponds to levels 31-year-old.

After a landslide decline in the results of the referendum in late June on the 4-hour chart formed a descending channel with a lower limit near the level of 1.2600 and the top - near the level of 1.3100.

And the technical indicators and fundamental background point to a further decline in the pair GBP / USD.

Only when the price rises above level 1.3230 (the low of June) it would be possible to speak of a more serious correction to the level of 1.3650 (lows in 2009, 2001).

Support levels: 1.2900, 1.2800, 1.2700, 1.2600

Resistance levels: 1.3020, 1.3230, 1.3430, 1.3500, 1.3600, 1.3670, 1.3700, 1.3800, 1.3860


Overview and Dynamics

Despite the fact that the pound is trading at the lowest levels in the past more than 30 years,

the market is still a tendency to further sales of pounds. This is due to the situation with the rate in the United Kingdom, and the risk of recession in the country. Publication of decisions on the rate in the UK is expected on Thursday at 11:00 (GMT).

At the beginning of the month the head of the Bank of England Governor Mark Carney said that the summer will require "some" easing of monetary policy in the UK. Speech Carney returned a pair GBP / USD to lows reached in the "Black Friday", when they were published the results of a referendum. In the UK the central bank last week warned in its report that the prospects for the country's financial system stability were "questionable" after the referendum. Also, the central bank managers reported that they found in the stock markets and commercial real estate markets are signs that foreign investors are pulling money out of the UK.

The Bank of England also lowered capital requirements for UK banks, which should contribute to an increase in lending to companies and households. This decision is preceded by the expected reduction in interest rates. Many economists also predict that the Bank of England will resume its asset purchase program, frozen in 2012.

At the same time the Bank of England believes that the UK economy is now stronger than it was in 2008 and 2009. The head of the bank's Governor Mark Carney said that the decline of the pound was necessary to correct the economy following the referendum. The decline of the national currency should eventually boost exports and the country's economy.