The GBP/USD pair is trading within the upward channel for the second week. The GBP was supported by the statement of the head of the Bank of England, Mark Carney who stated that the time of interest rates increase is coming up regardless of the low inflation rate. In June, the Consumer Price index in the UK fell to zero but is expected to grow towards the end of the year.
Generally, experts do not expect an interest rates increase in the UK earlier than 2016. At the same time, in the US the interest rate hike may happen later this year if the inflation rate reaches its 2% target. After the most recent statements by Janet Yellen regarding a high possibility of interest rates increase this year, the GBP stopped growing against the USD and gradual correction in the pair began.
Support and resistance
The price reached the upper border of the upward channel and 50% Fibonacci arc, which is the resistance level. The price is now testing the level of 1.5615 (50% Fibonacci), the consolidation below which would allow it to fall to 1.5550 (38.2% Fibonacci) and, possibly 1.5470 (23.6% Fibonacci). However, if the price breaks out the 50% arc and consolidates above 1.5640, it is likely to grow towards 1.5685 (61.8% Fibonacci) and 1.5755.
Support levels: 1.5615, 1.5550, 1.5470.
Resistance levels: 1.5640, 1.5685, 1.5755.
Open short positions from 1.5600 with targets at 1.5550, 1.5470 and stop-loss at 1.5635.
Long positions can be opened after the breakout of the level of 1.5640 with targets at 1.5685, 1.5755 and stop-loss at 1.5600.