GBP/USD: analysis and forecast for May 22, 2015

May 22, 2015

Current trend

Yesterday was a favourable day for the British Pound. The pair has gained 150 points and reached the level of 1.5700. Demand for the Pound was supported by the positive macro-economic statistics: retail sales rose by 1.2% in April against the forecast of 0.4%. On annual basis this index rose by 4.7% versus expectation of 3.8%.

In addition to the above factors interest to the GBP is growing due to the unclear situation about the timing of the interest rate increase in the USA. Despite the assurance of the US FOMC members that slowdown in the economic growth is of the temporary nature, the indicators show the opposite. Labor market statistics, which demonstrated positive dynamics in the past few months compared with the other macro-economic data, was negative yesterday. According to the report by the US Department of labor the number of initial applications for unemployment benefits has increased from 264 thousand to 274 thousand. Sales on the secondary housing market fell from 5.21 million to 5.04 million.

The US inflation data will become today. Analysts expect that consumer price index will fall from 0.2% to 0.1%. On annual basis this index shall remain unchanged showing the deflation of 0.1%.  In case of even more negative statistics, it will provide significant support to the pair GBP/USD. 

A speech of the head of the Bank of England is also scheduled for today. It can shed the light to the future plans of the regulator for the British monetary policy.

Support and resistance

Resistance levels: 1.5700 (yesterday’s highs), 1.5814 (highs of 14 May), 1.5900 (moving average with the period 200), 1.6000 (psychologically important level).

Support levels: 1.5631 (Asian session lows), 1.5460 (middle line of Bollinger bands), 1.5340 (Fibonacci retracement of 38.2%), 1.5190 (Fibonacci retracement of 50%).

Trading tips

Buy positions can be opened after breakdown of the level of 1.5700 with the first target of   1.5810 and the second one at 1.5900. Sell positions are advisable from the level of 1.5650 with the targets of 1.5460 and 1.5350. 

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