The GBP/USD broke the wedge pattern in a major sharp fundamental move that was caused by the release of the UK Consumer Price Index.
By the middle of Wednesday's European trading hours, the GBP/USD currency pair was trading in limbo around the weekly R1 simple pivot point in the range from 1.3040 to 1.3060.
The British Pound appreciated against the US Dollar, following the UK CPI data release on Wednesday at 06:00 GMT. The GBP/USD exchange currency rate gained 69 pips or 0.53% after the release. The Pound continued trading at the 1.3040 level against the Greenback after the release.
The Office for National Statistics released the UK CPI data, which came out better-than-expected of 0.5% compared with the forecast of 0.4%.
According to the official release: "The largest contribution to the CPIH 12-month inflation rate in September 2020 came from recreation and culture (0.31 percentage points). Transport costs, and restaurant and café prices, following the end of the Eat Out to Help Out scheme, made the largest upward contributions (of 0.23 and 0.21 percentage points, respectively) to the change in the CPIH 12-month inflation rate between August and September 2020."
Economic Calendar
On Thursday, the weekly US Unemployment Claims will be out at 12:30 GMT. The GBP/USD has moved from 7.4 to 11.3 pips on the publication.
On Friday, the GBP/USD currency exchange rate could be impacted by the UK and US Markit Services and Manufacturing Purchasing Managers Indices.
The UK data could cause a move from 18.5 to 25.0 pips at 08:30 GMT. Afterwards, at 13:35 GMT the US PMIs could cause a move from 8.8 to 21.2 pips.
Click on the link below to find out more about the data releases.
GBP/USD short-term review
During Wednesday morning hours, the GBP/USD exchange rate broke the falling wedge pattern north and jumped to the weekly R1 at 1.3049.If the predetermined resistance level holds, it is likely that a reversal south could occur, and the currency pair could decline to the support area formed by the 55-, 100– and 200-hour SMAs, as well the weekly PP in the 1.2945/1.2975 range.
On the other hand, the exchange rate could gain support from the monthly PP at 1.3028. Thus, some upside potential could continue to prevail in the market, and the rate could target the 1.3100 level.
Hourly Chart
On the daily candle chart, as expected, the 55-day simple moving average was broken.
In the meantime, the 1.3084 level has been marked with a horizontal line. This level is the high level of October that stopped the rate's previous surge.
Daily chart
On Tuesday, 50% of trader open position volume on the Swiss Foreign Exchange was in long and short positions.
On Wednesday, 51% of volume was in short positions.
Meanwhile, in the 100-pip range around the rate the pending orders were 75% to sell the GBP/USD pair.