On Wednesday, various exchange rates could react to the publication of the Markit Services and Manufacturing Purchasing Managers Indices. They are called indices, but in fact are survey results. Managers of a sector are surveyed about their expectations of the future in the sector.
In general a reading above 50 is seen as positive and a reading below 50 means bad expectations. However, the market does not care for the reading. What matters is the difference from the market consensus forecast. If the released reading is below or above expectations and there is a major difference, it shows that the market was wrong. Such data is followed by an adjustment in the underlying currency's value.
On Thursday, the US Advance GDP might impact the markets via an adjustment of the value of the US Dollar. Better GDP means that the US does not need to cut rates, which would keep the Dollar higher. Bad GDP data indicates that the Fed can cut, which would reduce the value of the USD.
On Friday, at 12:30 GMT, the top event of the week will take place. The US Core PCE Price Index will move the markets. The Core Personal Consumption Expenditure Index is expected to impact the markets by revealing whether inflation has increased or continues to decline. In general, the markets expect a reading of a monthly price increase of 0.2%. If the number is higher, the Dollar should surge. A reading below +0.2% is set to cause a decline of the USD.
GBP/USD hourly chart analysis
The recovery of the Pound against the US Dollar is encountering resistance in the combination of the 50 and 200-hour simple moving averages near 1.2935. If these levels are broken, the rate might be slowed down by the 1.2950 level, the weekly simple pivot point and the 100-hour simple moving average. A failure of these levels to hold is most likely going to result in a test of the 1.3000 mark.In the case of a decline of the currency pair, it will look for support in the 1.2900 mark. If this level fails, the weekly S1 at 1.2859 and 1.2850 might stop the decline, before the 1.2800 mark and the weekly S2 are reached.
Hourly Chart
GBP/USD daily candle chart analysis
Prior analysis: "On the daily candle chart, the pair has hit the upper trend line of the pattern that has guided the GBP/USD up since mid-April. Moreover, the pair apparently has booked a new 2024 high level.A bounce off from the trend line could result in the rate looking for support in 1.2900 and the prior 2024 high at 1.2899, before the rate declines to the 1.2800/1.2850 zone."
On July 22, the rate was finding support in 1.2900, but there was resistance at 1.2950 that was keeping the pair from resuming the prior surge.
Read More: Technical Analysis
Traders remain short
This week, the Dukascopy open positions were short as 67% of all open position volume was in short positions.
Meanwhile, pending orders in the 100-pip range around the rate were 61% to sell the pair.
Last week, traders had doubled down on their shorts, as 74% were short and pending orders were 51% to sell.
Last week, traders had doubled down on their shorts, as 74% were short and pending orders were 51% to sell.