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GBP / USD pair awaits the outcome of the meeting of EU leaders

The GBP / USD pair is currently trading with a slight decline of 0.06%. Moderate pressure on the price is exerted by the US dollar, which at the beginning of the Asian trading session strengthened against all G7 currencies, except for the New Zealand dollar. The demand for the US currency rose after Johnson and Johnson announced a temporary suspension of trials of the COVID-19 vaccine.

At the same time, the market reacted calmly to the mixed data of the UK labor market statistics. During the reporting month, the unemployment rate jumped from 4.1% to 4.5%. Experts had expected a more modest growth to 4.3%. The number of applications for unemployment benefits fell to +28 thousand, against 73.7 thousand a month earlier. The average wage has not changed. Experts had expected a decline of 0.6%.

The statements of the head of the Bank of England, Andrew Bailey, have a positive effect on the British currency, who noted that the regulator is not yet considering the issue of introducing negative interest rates. Now the regulator is considering the possibility of including this option in the set of monetary policy instruments. The final decision on this issue will be made after consultations with commercial banks. Let us remind you that the meeting of the leaders of the EU countries will take place on Thursday, October 15.

The pound will be strongly influenced in the coming days by the meeting of the leaders of the EU countries in Brussels. The meeting participants will discuss an action plan in case of a hard Brexit scenario. Today, EU chief negotiator Michel Barnier on Tuesday will brief all 27 European ministers on the progress of the talks.

On the chart, despite the local decline in quotations, the bullish scenario remains relevant. Buyers keep the price above the local support levels at 1.3030 and 1.3005, therefore, we consider the scenario with the growth of quotes in the direction of 1.3150 as a priority.

  • Resistance levels: 1.3075, 1.3150, 1.3350;
  • Support levels: 1.3030, 1.3005, 1.2925.

The main scenario is a breakdown of resistance at 1.3075 and an increase to 1.3125.

An alternative scenario is a decline below 1.3005 and the development of a downward movement to 1.2925.

 The current fundamental background is neutral. We are considering longs in the range 1.3005-1.3030.

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