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At Friday's trading session, August 26th, GBP/USD retained a resistance level of 1.3260 and the pound therefore lost over 150 points against the USD.
Demand for the dollar grew significantly on Friday evening following the US Fed Head Janet Yellen's speech. Yellen hinted that over the past two months, the regulator had become more inclined to raise interest rates due to a positive forecast for the US economy;
Technical analysis suggests that the downward trend for GBP/USD may continue. The price consolidated below a support level of 1.2905. The MACD histogram is in the negative zone and its volumes are continuing to decrease.
The Commitments of Traders Report provides ambiguous data. Huge operators increased long positions by 642 contracts. Short positions were increased by 765 contracts.
A news factor is worth attention this week: The UK's business activity index in the manufacturing sector (Thursday) and the US non-farm payrolls (Friday). These events may affect market volatility.
Fed's eventual tightening of monetary policy supports demand for the USD. Technical analysis suggests that the bearish trend may continue for GBP/USD. According to COT report, huge operators are not definite about the pound.
So, we expect that the pound will weaken against the USD in the nearest future. We advise you to search for market entry points to open short positions.
Trading tips for GBP/USD
Support levels: 1.3035, 1.2995, 1.2945
Resistance levels: 1.3085, 1.3130, 1.3170
Medium-term trading, H1
The currency is currently trading near a local support level at 1.3060. Once this level is broken and tested and relevant confirming signals appear (Price Action patterns, for example), we recommend searching for market entry points to open short positions. Risk per trade: no more than 2% of equity. Stop order shall be placed a bit above the signal line. We recommend that prospective profits should be fixed partly at the levels of 1.2995, 1.2950 and 1.2910, with Trailing Stop applied.