GBP/USD reacts to central banks

Source: Dukascopy Bank SA
Both the US Federal Reserve and the Bank of England have kept interest rates unchanged. However, for some reason the GBP/USD dropped on the US announcement and then sharply recovered on the UK announcement. The rates were expected to remain unchanged and supposedly the news were priced in. Due to this reason the reason for the fluctuations are unclear.

The GBP/USD dropped below the 1.2650/1.2660 support range, before starting a recovery. By late Thursday's trading, the pair was back at Wednesday's high level.

Economic Calendar



On Friday, at 13:30 GMT, the US Employment data sets will be released and they are set to impact the market. The release consists of Unemployment Rate, Non-Farm Employment Change and the Average Hourly Earnings month on month difference.

GBP/USD hourly chart analysis

An extension of the ongoing surge is set to face the resistance range at 1.2760/1.2780 and the weekly R1 simple pivot point at 1.2768. Higher above, note the 1.2800 mark, the August high at 1.2819 and the weekly R2 simple pivot point at 1.2834.

In the case of a decline, the rate is set to look for support in the weekly simple pivot point at 1.2709, the 1.2700 mark and the combination of the 50, 100 and 200-hour simple moving averages in the 1.2680/1.2700 range. Further below, note that the 1.2650/1.2660 range could once again turn into support. Further below, note the weekly S1 at 1.2643.

Hourly Chart

GBP/USD daily candle chart analysis

On the daily candle chart, additional support appears to be provided by the 50-day simple moving average at 1.2680. In addition, note the 200-day SMA at 1.2575.
Daily chart


Traders have gone short

On Thursday, traders were 55% short, as that proportion of all open positon volume on Swiss Foreign Exchange was in short positions.

Meanwhile, pending orders in the 100-pip range around the rate were 67% to sell.

Before the central bank events, traders were 50% short and long. Pending orders were 54% to buy.

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