During today's morning, the GBP/USD exchange rate surpassed the support level - the weekly S1 at 1.2102.
Given that the rate is pressured by the 55-, 100- and 200-hour moving averages, it is likely that some downside potential could prevail.Pound depreciates on possible Parliament suspension
On Wednesday morning, August 28, the British Pound depreciated 129 pips or 1.05% against the US Dollar.
The reason for the drop is a possibility that the UK Queen Elizabeth could be asked to extend the UK Parliament break until October 14.
Previously, the British Prime Minister Boris Johnson said that the UK would leave the European Union with or without a deal on October 31. Thus, a possible Parliament suspension might be a part of the UK Government campaign to get Brexit done.
Economic Calendar
This week there are a couple of US data releases on the economic calendars that are shown as high impact.
On Tuesday, at 14:00 GMT the US ISM Manufacturing PMI might impact the GBP/USD rate. Since April the announcement has caused moves from 13.2 to 25.4 base points.
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
During the previous trading session, the GBP/USD exchange rate tested the resistance formed by the 55-, 100– and 200-hur SMAs located in the 1.2200/1.2220 range. During today's morning the rate surpassed to the support level—the weekly S1 at 1.2102.It is expected that the currency pair could continue to trade downwards. Note that the nearest support area, formed by the weekly S2 and the monthly S1, is located circa 1.2020.
On the other hand, the British Pound could trade sideways against the US Dollar near the weekly S1 in the nearest future. Also, it is unlikely that bulls could prevail, as the rate is pressured by the 55-, 100- and 200-hour SMAs.
Hourly Chart
On the daily candle chart, the rate has bounced off the resistance of a dominant channel down pattern.
Moreover, the rate is being forced into a decline by the resistance of the montly pivot point at 1.2116.
If the rate trades consistent with the pattern, it is set to decline in the borders of the pattern until the end of September.
Daily chart
Read More: Technical Analysis
Volume of long positions increased
On Monday morning, SWFX sentiment was 62% long. Despite the drop, traders have remained long on GBP/USD.
Meanwhile, trader set up pending orders in the 100-pip range were bullish, as 67% of orders were set to buy and 33% were to sell.
The orders previously were 55% to buy.
On Monday morning, SWFX sentiment was 62% long. Despite the drop, traders have remained long on GBP/USD.
Meanwhile, trader set up pending orders in the 100-pip range were bullish, as 67% of orders were set to buy and 33% were to sell.
The orders previously were 55% to buy.