General analysis GBPUSD for 12.04.2022

Current dynamics

GBP/USD is declining this week and is currently trading near its lowest level in a year and a half again. Yesterday the pressure on the British currency was put by the release of weak macroeconomic data on GDP and industrial production. Thus UK GDP growth slowed down and only grew by 0.1% month-on-month, against a forecast of 0.3%. At the same time, the trade deficit shrank by only 31 million pounds while experts predicted a larger reduction of 90 million pounds. In this connection, it is worth noting that the total trade deficit amounts to 20,59 billion pounds, at the same time more than half of the negative balance is formed from the exchange of goods outside the European Union. Industrial production fell in February, slipping back into negative territory after a minimal recovery in the first quarter of 2022. Manufacturing statistics also disappointed market participants, reflecting a 0.4% decline in the sector, while a 0.3% increase was expected.
Today the pair continues to trade within the downtrend. In the face of high price pressures, British employers are being forced to raise wages. However, compared to the same period last year when the pandemic forced the government to impose harsh social distancing measures, the British labour market has slowed down significantly.
The dollar, meanwhile, is strengthening against major currencies as it continues to get support from a hawkish Fed that is trying to take control of inflation. Another factor in the dollar's strength is rising treasury bond yields. The US regulator is preparing not only to raise rates but also to start an accelerated balance sheet reduction as early as May. In this regard, today's macroeconomic releases on US inflation will have a strong impact on the dynamics of the pair. Also worth considering the high volatility at the moment of US CPI data release at 14:30 (GMT+2) today.

Support and resistance levels

On the 4-hour chart, the instrument is consolidating near the lower boundary of the Bollinger Bands, which is the key support level. The indicator is pointing downwards and the price range remains unchanged, indicating a further decline in the pair. MACD histogram is in the negative zone, keeping a strong sell signal. Stochastic is approaching the oversold area from below, no signal to open positions has been formed.

• Support levels: 1.2910, 1.2970, 1.3000.
• Resistance levels: 1.3040, 1.3080, 1.3115, 1.3215.

Trading scenarios

• Open short positions below 1.2995 with a target of 1.2910 and a stop loss at 1.3045. Implementation period: 1-3 days a day.
• Long positions should be opened above the level of 1.3045 with a target of 1.3150 and a stop loss at 1.2990. Implementation period: 2-3 days.