GBP/USD: UK inflation continues to slow

Current dynamics
After a significant drop last week, the pair is correcting upwards, settling at the 1.2716 level. This is due to the slowing growth of the US dollar and positive macroeconomic statistics from the United Kingdom.

In May, the consumer price index increased 0.3% compared to the previous month, almost in line with analysts' expectations. This change favored the correction of the annual value from 2.3% to 2.0%, maintaining the trend of recent months. Meanwhile, the underlying value, excluding fuel and food prices, decreased from 3.9% to 3.5%. However, the likelihood of this data influencing the Bank of England's monetary policy decisions is low. Economists have probably already considered the current dynamics and will continue to keep borrowing costs around 5.25% to bring inflation back to the 2.0% target. On Friday at 08:00 (GMT+2) the report on the dynamics of retail sales will be published, which according to forecasts will correct from -2.3% to 1.5% monthly and from -2.7% to -0.9% annually. In addition, the S&P Global business activity index in the industrial sector fell from 51.2 points to 51.0 points in June, and in the services sector from 52.9 points to 53.0 points.

The US dollar is trading at the 104.90 level on the USDX. Tomorrow investors will pay attention to statistics on the national real estate market and the number of unemployment claims. Housing starts are expected to increase from 1.36 million to 1.38 million, the number of initial unemployment claims is expected to decrease from 242,000 to 235,000, and the number of continuing claims for the week of June 7 is expected to decrease from 1 .82 million to 1.81 million.

Support and resistance levels
On the daily chart, the trading instrument is finishing the formation of a rare “three white crows” candlestick pattern, which is likely to materialize downwards.

Technical indicators are turning lower: the fast EMAs of the “Alligator” indicator are approaching the signal line and the AO histogram forms corrective bars descending into the buy zone.

Resistance levels: 1.2760, 1.2890.
Support levels: 1.2670, 1.2560.

Business scenarios
Short Positions: They can be opened after the price declines and consolidates below the level of 1.2670, with a target at 1.2560. Set the Stop Loss at 1.2720. The deadline for this scenario is 7 days or more.

Long Positions: They can be opened after the price rises and consolidates above the level of 1.2760, with a target at 1.2890. Set the Stop Loss at 1.2700.

This analysis serves as a compass for your investments. As Aristotle said: “Courage is the first of human qualities because it guarantees all the others.” So adjust your sails and sail with confidence!

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