The GBP/USD currency pair experienced a decline and closed near the Murray level of "1/8"-1.2756 by the end of the day. The pair remains below the moving average line, indicating a continuing downward trend. However, the uncertainty lies in the upcoming Bank of England meeting, which could trigger a significant market reaction, impossible to predict in advance. This uncertainty arises because we need to know the decisions and statements that will be made.

While the decision on the interest rate is already known, questions regarding Andrew Bailey's rhetoric, the number of future rate hikes, and the level of support from the Monetary Policy Committee still need to be answered. These factors will be addressed during the Bank of England's meeting on Thursday.

The market is moderately selling the pound, but the reasons for this may vary. It may be due to skepticism about the BOE's aggressive stance being maintained, the anticipation of prolonged and strong growth, or simply a technical correction following the pound's recent surge in value.

Though it seems logical for the pound to depreciate, past events have shown that unexpected outcomes are possible. For instance, two months ago, the pound's growth appeared unusual, but the Bank of England raised the rate, even accelerating its pace at the last meeting. Another surprise could happen during this week's meeting, with a 0.5% tightening, although it is less likely.

The market eagerly awaits signals from the Bank of England. Additionally, labor market reports in the United States will be vital. Despite concerns about the American economy, it has remained resilient, with no signs of recession, rising unemployment, or a declining labor market despite the Federal Reserve's high national debt and cash issuance.

These factors support a strengthening dollar compared to the pound. The current inertial trend may persist until the BOE signals the end of the tightening cycle. Once this signal is received, there will be no basis for further pound purchases.

Regarding the labor market reports in the US, weak values could exert temporary pressure on the dollar but are unlikely to have a significant long-term impact. With the inflation rate nearly 2%, the Fed may consider easing its monetary policy next year. If the US labor market statistics are strong, the dollar may experience growth after a prolonged decline.

The average volatility of the GBP/USD currency pair over the last five trading days is 114 pips, considered "high" for this pair. On Wednesday, August 2nd, we anticipate movement between 1.2656 and 1.2884. A reversal of the Heiken Ashi indicator upwards will indicate a new surge in the upward movement.

Nearest support levels:

S1 - 1.2756

S2 - 1.2695

S3 - 1.2634

Nearest resistance levels:

R1 - 1.2817

R2 - 1.2878

R3 - 1.2939

Trading recommendations:

In the 4-hour timeframe, the GBP/USD pair continues to be below the moving average. Short positions with targets at 1.2695 and 1.2634 are currently relevant and should be held until the Heiken Ashi indicator reverses upwards. Long positions can be considered if the price consolidates above the moving average, with targets at 1.2878 and 1.2939.

Explanations for the illustrations:

Linear regression channels - help determine the current trend. If both channels are directed in the same direction, it indicates a strong current trend.

Moving average line (settings 20.0, smoothed) - determines the short-term trend and direction for trading.

Murray levels - target levels for movements and corrections.

Volatility levels (red lines) - the probable price channel in which the pair is expected to trade within the next day, based on current volatility indicators.

CCI indicator - its entry into the oversold area (below -250) or overbought area (above +250) indicates an upcoming trend reversal in the opposite direction.