The GBP/USD has reached the 1.3060 level, beating Tuesday's expectations. The next target for the surge was the 1.3100 level, which was expected to be reached after a period of sideways trading.
At that level the rate should meet with a combination of pivot points and the psychological resistance of the 1.3100 level.
Fundamentals Crash US Dollar
Since Monday, December 2, the US Dollar has been depreciating.
Most likely, the Greenback is pressured by various fundamental events. Firstly, on Monday, the World Trade Organization rejected the EU claims for providing subsidies to Airbus. Thus, the US could increase tariffs on more European goods.
Also, on Monday, Cuba took another step to end dual monetary system, and two department stores in Havana began to give change only in pesos.
Moreover, the US President Donald Trump announced tariffs on the US steel and aluminum imports from Brazil and Argentina. Trump claimed that the given countries control devaluation of their currencies, and it was harmful for the US farmers.
According to analysts, the Greenback was also pressured, as the US factory activity has been declining for four months. Also, the US construction spending dropped in October.
On Tuesday December 3, the EU representatives said that the union was ready to reciprocate in case the US would impose tariffs on the French products worth $2.4B.
All these events could negatively affect the demand for the US Dollar, as trade flows could decrease significantly.
Economic Calendar
This week the rate might get impacted by US data.On Wednesday, there are two US events that the media will pay attention to. The ADP Non-farm Employment Change at 13:15 GMT and the US ISM Non-Manufacturing PMI at 15:00 GMT.
The ADP Employment Change has created reactions on the GBP/USD charts from 11.8 to 28.4.
In the meantime, the ISM Non-Manufacturing PMI since June 2019 has caused moves from 8.8 to 37.8 pips.
On Friday, the US Employment data sets will be published at 13:30 GMT. The event consists of three numbers – Average Hourly Earnings, Non-farm Employment Change and Unemployment Rate. Since July, moves from 21.7 to 51.3 pips have been caused by the release.
Meanwhile, the week's scheduled event historical data tables have been published. Click on the link below to read the article.
GBP/USD short-term review
By the middle Wednesday' London trading hours, the GBP/USD exchange rate had reached the 1.3060 level, where it paused and began to trade between 1.3040 and 1.3060.In general, the rate was expected to consolidate by trading sideways until some of the overbought pressure passes. Namely, the hourly simple moving averages approach the rate.
Afterwards, the pair should surge to the 1.3100 level, which would provide resistance.
In addition, note that just above the 1.3100 level, the weekly R3 simple pivot point and the monthly R2 simple pivot point. They were located at, respectively, 1.3109 and 1.3115.
Hourly Chart
On the daily candle chart, the rate has pierced the resistance of the medium pattern, which was guiding the rate to the support of a larger channel up pattern.
It signals that the rate has ended its sideways trading, which has been occurring since the end of October.
Daily chart
By the middle of Wednesday's trading, 71% of volume was short.
Meanwhile, trader orders were set to sell. In the 100-pip range, 95% of orders were sell and 5% were to buy.
The data indicates that a big proportion of traders has opened short positions and almost all pending orders are also to sell. The situation had not changed since Tuesday.