GBP/USD has dropped below the technical support levels that are located in the range from 1.3095 to 1.3160.
The event took place due to the announcement that Brexit could be delayed up to a year. This possible uncertainty caused the decline of the price of GBP.
The British Pound depreciated against the US Dollar, following the UK Current Account release on Friday at 9:30 GMT. The GBP/USD exchange rate lost 25 pips or 0.19% right after the release. The British Pound continued trading at the 1.3030 level against the US Dollar.
The Office for National Statistics released the UK Current Account data, which came lower-than-expected. The index was negative 23.7B compared with forecast negative 22.9B.
"An elevated shortfall is a potential source of vulnerability for the UK economy — particularly if there was any major loss of investor confidence in the UK for any reason, most obviously Brexit concerns," economist Howard Archer, from the EY ITEM Club Consultancy, said.
US and Canadian data on Friday
On Friday, at 12:30 GMT the US and Canadian employment data sets will be published. The US data is expected to impact all USD pairs.Meanwhile, the Canadian data should cause a much bigger impact on all CAD pairs. Most complicated price movements will happen on the USD/CAD.
GBP/USD short term review
The GBP pairs have once more reacted to a fundamental Brexit announcement. Namely, the possible delay of the event for up to a year proposed by the head of the EU.The uncertainty of the value of the GBP caused a decline of the currency value. During the event the rate fell below all short term technical support levels. Due to that reason it is expected to continue to decline.
Meanwhile, the rate could trade sideways in the expectations of clarity about the Brexit deadline.
Hourly Chart
On the daily chart the rate also has dropped below technical significance levels. Due to that event the closest support levels are located at 1.3000.
At that level the lower trend line of the long term ascending channel together with the 200-day simple moving average are located at.
Daily chart
By the middle of Friday's trading only 52% of the volume was short. Dukascopy Analysts assume that it was caused due to profit taking from the recent drop.
Meanwhile, the pending orders in the 100-pip range from the current rate were no longer set to sell. Namely, 54% of the orders were set to buy.
Previously, the orders were set to sell. They, most likely, were executed during the drop, opened short positions that were closed as soon as the rate began to retrace back up.