The British pound continues to trade with a bullish outlook. GBP/USD is still consolidating in a relatively tight range. The key level is the area where the 21 SMA and the 4/8 Murray converge.
The GBP / USD pair is consolidating in the 4/8 murray zone around 1.3929 ahead of ADP employment report in the US which is expected to show an increase in jobs greater than 600,000.
If the published data is negative for the US dollar, we expect an upward momentum towards the 1.3977 resistance zone. So, the currency pair could reach the psychological level of 1.40.
1.3916 is the key level to watch. As long as GBP / USD remains above this level, we expect a price increase towards 1.3977 and towards the 6/8 murray zone around 1.4038.
According to the 4-hour chart, you can see that the British pound is trading within an uptrend channel. If the channel is not broken, GBP/USD is likely to carry on with the upward movement in the next few hours.
Conversely, a sharp breakout and consolidation below the key 1.3916 level will be a good selling opportunity with targets in the 1.3835 area of the 200 EMA.
Tomorrow, on Thursday, GBP/USD is set to trade under strong volatility. The Bank of England (BoE) is due to unveil its monetary policy update. The overall rhetoric is likely to be cautious and it could weaken the British pound.
The key point to watch is the 1.3916 area and the uptrend channel. Above this area, we will continue to buy. Below this area, GBP/USD is likely to fall towards the 4/8 murray around 1.3793(2/8).
Support and Resistance Levels for August 04 - 05, 2021
Resistance (3) 1.4005
Resistance (2) 1.3971
Resistance (1) 1.3941
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Support (1) 1.3877
Support (2) 1.3843
Support (3) 1.3817
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Trading tip for GBP/USD for August 04 - 05, 2021
Buy above 1.3916, with take profit at 1.3977 (5/8), stop loss below 1.3880.
Sell if breaks below 1.3905 (4/8), with take profit at 1.3835 (EMA 200), stop loss above 1.3940.
The material has been provided by InstaForex Company - www.instaforex.com