The release of worse than expected US employment data caused a surge of the GBP/USD on Friday. The surge was stopped by the upper trend line of the channel up pattern, which has guided the rate since the middle of August. The event was followed up by a decline.
On Monday morning, the decline was heading for the combined support of the weekly simple pivot point and the 55-hour simple moving average at 1.3833.
Economic Calendar
This week, the GBP/USD could react to the Monetary Policy Report Hearing on Wednesday 15:00 GMT. The Bank of England Governor and Monetary Policy Committee members are set to testify before the Parliament Treasury Committee.
On Friday, the rate could move due to the publication of the US Producers Price Index at 12:30 GMT.
GBP/USD short-term review
In the case that the rate recovers from the pivot point and the 55-hour SMA, the GBP/USD could surge. A potential surge would most likely test the August high levels near the 1.3880 level. Above the 1.3880 level, the 1.3900 might provide resistance before the pair aims at the weekly R1 simple pivot point at 1.3934.On the other hand, a decline of the pair below the 1.3830 level could look for support in the 1.3800 level and the 100-hour simple moving average. Below the 1.3800 mark, the lower trend line of the channel up pattern might hold the rate up.
Hourly Chart
GBP/USD daily chart's review
On the daily candle chart, the rate has broken the resistance of the 55 and 200-day simple moving averages, which were strengthening the 1.3800 mark.The next resistance on the daily candle chart is the 100-day simple moving average at 1.3921. Meanwhile, note that the 55 and 200-day SMAs could start to provide support to a potential larger scale surge to the summer high level of 1.4000.
Daily chart
Read More: Technical Analysis
Traders are short
On Monday, traders were short, as 61% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Friday, 58% of volume as in short positions.
Meanwhile, in the 100-pip range around the rate the pending orders were 66% to sell.
On Monday, traders were short, as 61% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Friday, 58% of volume as in short positions.
Meanwhile, in the 100-pip range around the rate the pending orders were 66% to sell.