Namely, the traders who shorted the drop from 1.2900 to 1.2670 appear to be taking profits, which is causing a surge. Profits are being taken due to the upcoming US and UK central bank rate announcements. Despite market expectations, the two events are bound to cause volatility. Moreover, surprises are still possible and could cause a technical trader major losses. Economic Calendar
All of the financial markets will be watching the US Federal Reserve Federal Funds Rate publication on Wednesday at 20:00 GMT. Note the time difference in the release, compared to the usual. The US has already switched to summer daylights savings time.
After the US releases its base rate, the Bank of England is set to do the same on Thursday at 12:00 GMT. In general, in most cases the BoE just follows the example of the Federal Reserve. However, sometimes surprises in how the monetary policy committee has voted create GBP moves.
Also on Thursday, the US Services and Manufacturing sector Purchasing Managers Indices might impact the financial markets. However, recent releases of the data had minor impact.
GBP/USD hourly chart analysis
A potential surge of the Pound against the US Dollar is set to face resistance in the 1.2720 level and the 50-hour simple moving average. Higher above, note the 100-hour simple moving average and the 1.2740 level. Above these two combinations resistance is expected to be found in the upper trend line of the channel down pattern and the 1.2760/1.2773 range together with the weekly simple pivot point.In the case of a resumption of the decline, it could be slowed down by the lower trend line of the channel pattern and the weekly S1 and S2 simple pivot points at 1.2683 and 1.2636. Further below, the notable 1.2590/1.2610 range is highly likely going to act as support.
Hourly Chart
GBP/USD daily candle chart analysis
On the daily candle chart, as it was previously expected, the 50 and 100-day simple moving averages are acting as support near 1.2775.Daily chart
Read More: Technical Analysis
Traders are neutral
Before the US Fed rate event, traders were 51% short, as that proportion of all open position volume on Swiss Foreign Exchange was in bearish positions.
Meanwhile, pending orders in the 100-pip range around the rate were 64% to buy.
Meanwhile, pending orders in the 100-pip range around the rate were 64% to buy.