The GBP/USD is surging in accordance with the technical patterns. Namely, it broke the resistance of a junior pattern due to finding support in the lower trend line of a larger pattern.
On Wednesday, the currency exchange rate was approaching the resistance of the 100-hour simple moving average, which was located just below 1.2600.
The British Pound depreciated against the US Dollar, following the UK GDP data set release on Monday at 08:30 GMT. The GBP/USD exchange currency rate lost 17 pips or 0.13% right after the release. The British Pound continued trading at the 1.2690 level against the Greenback
Office for National Statistics released the UK GDP data, which came out worse-than-expected of negative 0.4% compared with forecast negative 0.1%. Note, that the UK Manufacturing Production data was released at the same time.
According the official release: GDP growth showed some weakening across the latest 3 months, with the economy shrinking in the month of April mainly due to a dramatic fall in car production, with uncertainty ahead of the UK's original EU departure date leading to planned shutdowns. There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK's original EU departure date has faded."
UK CPI, Retail Sales and Bank of England announcements this week
On Wednesday, at 18:00 GMT the Federal Reserve is making its FOMC Statement, Federal Funds Rate and Economic Projections. Afterwards, at 18:30 GMT the FOMC Press Conference will take place.
On Thursday, at 11:00 GMT, Bank of England will make a Rate Statement, Monetary Policy Summary and MPC Official Bank Rate Votes.
In addition, this week there will be notable macroeconomic data releases occurring.
On Wednesday, the UK CPI will be published at 08:30 GMT. The event can cause a move of up to 20 pips.
On Thursday, UK Retail Sales will be out at 08:30 GMT. Although, the rate is not expected to cause a big move because the event will happen just before the Bank of England event.
GBP/USD short-term review
Yesterday, the GBP/USD exchange rate reversed north from the lower boundary of the medium-term descending channel at 1.2528.From a theoretical point of view, it is expected, that some upside potential could prevail in the market, as the rate targets the upper channel line. However, note, that the currency pair has to surpass the 100-hour SMA at 1.2597.
If the given resistance holds, a reversal south could occur within the following trading hours. In this case, the pair could be supported by the 55-hour SMA at 1.2555.
If the given resistance does not hold, the rate could target the resistance level formed by the 200-hour SMA and the weekly PP at 1.2644.
Hourly Chart
On the daily candle chart one can observe that the rate is oversold, as the daily simple moving averages were located far above the current currency exchange rate.
Meanwhile, the pair still remains in a large scale descending channel pattern.
Daily chart
On Monday, 68% of total open position volume on the Swiss Foreign Exchange were in long positions.
By the middle of Tuesday's London session the sentiment was 70% long, and on Wednesday 71% of open volume was long.
Meanwhile, trader set up pending orders in the 100-pip range were mostly set to sell, as 74% of orders were set to sell.