By mid-Monday's trading hours, the rate had reached the support of the 1.2800/1.2820 range. The range provided enough support for the pair to recover. However, almost immediately resistance was encountered in the 1.2845/1.2855 range. It has resulted in the pair fluctuating between the two ranges.
In the meantime, traders had opened long positions, as the Friday's neutral sentiment was gone. Moreover, there were additional pending orders to open additional bullish positions.
Economic Calendar
On Tuesday, the combination of the US CB Consumer Confidence index and the JOLTS Job Openings might create a move of the USD that would impact the financial markets.
On Wednesday, market participants are set to ignore the ADP Non-farm Employment release and other releases due to the top event of them all being scheduled for 18:00 GMT.
The US Federal Reserve is set to announced the Federal Funds Rate and release the Federal Open Market Committee Statement. In general, the Fed is announcing its policy and the reasons for it.
The markets expect the Fed to keep its base interest rate unchanged at 5.50%. In theory, the USD should not move during this event. However, all eyes will be on the statement, as the markets will be looking for clues about potential policy changes in September.
Currently the markets expect the Fed to cut rates in September. The statement might reveal that there will be no rate cut or that the Fed is 100% set to do it.
Moreover, additional information is set to be given by the Chairman of the Federal Reserve Jerome Powell at the follow up Press Conference at 18:30 GMT. In some cases, comments made by the head of the Fed during the press question session reverse the initial market reaction to the statement.
In general, expect high volatility.
Moreover, on Thursday, the UK central bankers take the stage. The Bank of England will announce its official bank rate at 11:00. The central bank is forecast to cut the interest rate from 5.25% down to 5.00%.
On Friday, the US monthly employment data sets are bound to move the markets. At 12:30 GMT, the US Bureau of Labor Statistics will publish the Average Hourly Earnings, Non-Farm Employment and the Unemployment Rate. Better than expected data is set to strengthen the USD. Below forecast numbers are likely to cause a decline of the USD.
GBP/USD hourly chart analysis
A breaking of the 1.2845/1.2855 zone is expected to result in the GBP/USD testing the resistance of the 50 and 100-hour simple moving averages and the upper trend line of the channel down pattern. If the rate reaches above these levels, it is set to face the weekly simple pivot point at 1.2885, before reaching the 1.2900 mark.However, in the case of a resumption of the decline and a move below 1.2800, support might be found in the weekly S2 simple pivot point at 1.2791 and the lower trend line of the channel pattern. Further below, note the 1.2740 level and the weekly S3 at 1.2733. Although, the pivot points might be ignored by the GBP/USD, as the S1 pivot point did not impact the rate during the first half of Monday.
Hourly Chart
GBP/USD daily candle chart analysis
On the daily candle chart, the rate has reached the 1.2800/1.2850 zone. The zone is acting as support. Moreover, it is being approached from below by the 50-day simple moving average.In the case that the GBP/USD recover, it is expected to face resistance at 1.2900 and 1.2950, as both of these levels have been support and resistance during July. If both are broken, the 1.3000 and 1.3050 levels might come into play.
On the other hand, a potential move below 1.2800 needs to pass the 50-day SMA near 1.2785. If the 50-day SMA fails, the rate will look for support in the lower trend line of the channel up pattern near 1.2750.
Read More: Technical Analysis
Traders go long
Last week, Dukascopy trades were short and eventually took profits, during the decline.
By mid-Friday, traders had taken profits. Open volume was 51% short and orders were 56% to sell. Traders had more and closed positions.
On Monday, by mid-day, traders were already long, as 57% of open position volume at Dukascopy was long.
In the meantime, trader set up pending orders in the 100-pip range above and below the current rate were 64% to buy. In general, more bullish positions are likely to be opened.
By mid-Friday, traders had taken profits. Open volume was 51% short and orders were 56% to sell. Traders had more and closed positions.
On Monday, by mid-day, traders were already long, as 57% of open position volume at Dukascopy was long.
In the meantime, trader set up pending orders in the 100-pip range above and below the current rate were 64% to buy. In general, more bullish positions are likely to be opened.