On Wednesday, GBP/USD stabilized at 1.2968 after a sharp rise last week caused by the weakening of the US currency.
Sterling remains stable after the publication of data on the consumer price index, which in June amounted to 2.0%, repeating last month and for the first time in several years fixed in the range of 1.5–2.0%. The core index excluding fuel and food remained at 3.5% year-on-year, falling from 0.5% to 0.2% month-on-month. Keeping inflation in the target range of the Bank of England allows us to expect that the regulator may begin easing monetary policy, possibly as early as the meeting on August 1. Analysts are waiting for the first act of monetary expansion by 25 basis points from 5.25% to 5.00%.
The dollar index is trading at 103.80 after a neutral market reaction to yesterday's macroeconomic statistics. The core retail sales index excluding cars increased from 0.1% to 0.4%, while the main indicator remained at 0.3% on a monthly basis, falling from 2.59% to 2.28% on an annual basis. This may force the Fed to reconsider the timing of the transition to monetary easing. However, Fed Chairman Jerome Powell said that the regulator would not wait for the 2.0% inflation target to be reached to ease policy, given the temporary delays in the impact of high interest rates to avoid excessive pressure on the economy.
Today, traders' attention is focused on reports on the US real estate market, where the volume of new home construction is expected to expand from 1,277 million to 1,300 million and the number of construction permits issued from 1,399 million to 1,400 million.
On the daily chart, the GBP/USD pair rises to the resistance line of the ascending channel with the boundaries of 1.3050–1.2740.
Technical indicators indicate a possible increase: the averages on the alligator indicator are moving away from the signal line, and the awesome oscillator forms growing bars in the purchase zone.
It is recommended to open long positions after the price is fixed above the 1.3010 level with a target of 1.3170. The stop loss should be set at 1.2940.
We will proceed to sales after the price is fixed below the level of 1.2910 with a target of 1.2740. The stop loss should be placed at 1.2970.