During Wednesday morning, the GBP/USD currency pair showed some signs of recovery.
However, note that the pair is pressured by the 200-hour moving average, thus, a reversal south could occur.
British Pound depreciates on Brexit tensions
On Monday, September 2, the British Pound depreciated 105 pips or 0.86% against the US Dollar. Note, that the Pound also depreciated against other major currencies.
The reason for the drop is the news that the British opposition lawmakers are planning to propose legislation to oblige the UK Government to suspend Brexit.
The UK Prime Minister Boris Johnson claimed that he would purge any member of the UK Parliament who would vote against the Government on Brexit.
Economic Calendar
This week there are a couple of US data releases on the economic calendars that are shown as high impact.
On Thursday, the US ADP Non-Farm Employment Change will be published at 12:15 GMT. Although, note that this is one of the releases that should not have a high impact mark and be discussed by financial media, as it has lost its power to impact the financial markets.
Due to that reason, since October 2018 our analysts ignored this data release. Recently, due to the possibility that it might have regained its strength, data was checked. Five minutes after the data release there were moves from 12.9 to 14.8 pips on GBP/USD chart. A fifteen pip range is normal volatility for the GBP/USD.
On Friday, US employment data will be published. The event will have three numbers being revealed – the Average Hourly Earnings, Non-Farm Employment Change and Unemployment Rate.
Due to each of the numbers impacting the rate differently by pushing the value of the USD up or down and with a different strength, the event has a wide range. Namely, since April the GBP/USD has moved from 14.8 to 34.1 pips due to the US labour data.
GBP/USD short-term review
On Tuesday, the GBP/USD exchange rate jumped to the 1.2100 level. During today's morning, the rate was testing the resistance level formed by the monthly PP and the 200-hour SMA at 1.2165.If the given resistance holds, it is likely that the currency pair could reverse south in the nearest future. However, note that the pair would have to surpass the support cluster formed by the 55– and 100-hour SMAs, as well the weekly S1 in the 1.2079/1.2125 range.
If the given resistance does not hold, the British Pound could continue to appreciate against the US Dollar in the short run. In this case the rate could target the weekly R1 located at 1.2272.
Hourly Chart
On the daily candle chart, the rate reversed from the monthly S2 at 1.2036 and jumped to the upper boundary of the medium-term descending channel.
From a theoretical point of view, it is likely, that a reversal south should occur, and the pair should trade downwards within the following month. Also, note that the rate is pressured by the 55-day moving average, thus, it is unlikely that bulls could prevail.
Daily chart
Read More: Technical Analysis
Traders remain long
On Wednesday morning, SWFX sentiment was 63% long.
The volume of long positions decreased, as yesterday it was 71%.
Meanwhile, trader set up pending orders in the 100-pip range were bullish, as 78% of orders were set to sell and 22% were to sell.
On Wednesday morning, SWFX sentiment was 63% long.
The volume of long positions decreased, as yesterday it was 71%.
Meanwhile, trader set up pending orders in the 100-pip range were bullish, as 78% of orders were set to sell and 22% were to sell.