However, the sharp decline quickly found support in the 1.2450 level and a recovery started. Since 68% of pending orders in the 100-pip range were to buy, it is assumed that most traders took profits or were stopped out by trailing stop losses.
By mid-Thursday, the pair had even reached above the 1.2550 level, as the 1.2505/1.2510 range acted as support. However, it appears that the sharp move upwards at 09:30 was caused by the publication of better than expected United Kingdom Purchasing Managers Indices of the Services and Manufacturing sectors. Read more here.
Economic Calendar
Next week, the EUR/USD could react to the publication of the German and Spanish Consumer Price Indices on Wednesday morning.
On Wednesday, at 13:30 GMT, the US Preliminary quarterly GDP is expected to impact the financial markets through the value of the US Dollar.
On Thursday, the publication of the US Core PCE Price Index at 13:30 GMT is most likely going to cause a USD move, as the US monetary policymakers watch this indicator.
GBP/USD short-term view
If the Pound continues to surge, it is expected to face the weekly R1 simple pivot point at 1.2576 and the 1.2600 mark.Meanwhile, a decline of the Pound against the US Dollar is set to look for support in the combination of the 50 and 100-hour simple moving averages and the 1.2505/1.2510 support zone. Further below, take into account the 1.2450 mark and the ascending 200-hour simple moving average.
Hourly Chart
GBP/USD daily chart's review
On the daily candle chart, the GBP/USD has broken the resistance of the 200-day simple moving average. There is no technical resistance on the daily candle chart, except the prior high and low levels of August and September that could impact the rate.Meanwhile, it was observed on Wednesday that as the rate ignored the moving average, it had started to respect the 1.2300/1.2450 range as support.
Daily chart
Read More: Technical Analysis
Traders are still short on GBP/USD
On Monday, open GBP/USD positions by Swiss Foreign Exchange traders were 54% short.
Meanwhile, trader pending orders in the 100 pip range around the rate were 51% to sell.
At mid-Tuesday, open positions were 61% short. However, orders were 60% to buy.
On Wednesday, positions were already 66% short and orders were 68% to buy. It appeared that traders were continuing to open short positions in the expectations of a decline, but had their stop loss buy orders close by.
On Thursday, traders were only 55% short and orders were 53% to sell. The previous short sellers must have taken profit, as the rate dropped down to 1.0850. The total move from mid-Wednesday to the low level was from 60 to 80 points or 0.50%-0.65%.
Meanwhile, trader pending orders in the 100 pip range around the rate were 51% to sell.
At mid-Tuesday, open positions were 61% short. However, orders were 60% to buy.
On Wednesday, positions were already 66% short and orders were 68% to buy. It appeared that traders were continuing to open short positions in the expectations of a decline, but had their stop loss buy orders close by.
On Thursday, traders were only 55% short and orders were 53% to sell. The previous short sellers must have taken profit, as the rate dropped down to 1.0850. The total move from mid-Wednesday to the low level was from 60 to 80 points or 0.50%-0.65%.