Market News and Research

GBP/USD breaks pattern
Fri, 12 Jul 2019 11:46:09 GMT
Source: Dukascopy Bank SA
 

The GBP/USD has broken the previously active descending channel pattern. The event resulted in a test of the 1.2570 level, which managed to hold and cause a decline.

By the middle of Friday's trading session, the GBP/USD was about to get squeezed in between the 55 and 200-hour simple moving averages near the 1.2530 level.

Latest Fundamental Event Report

The Federal Reserve released the US FOMC Meeting Minutes data, where the US policymakers provide in-depth insights into the economic and financial conditions that influenced their vote on where to set interests rates.

According to the official release: "Investors' concerns about downside risks to the economic outlook weighed on financial markets over the intermeeting period. Market participants cited negative news about international trade tensions and, to a lesser extent, soft U.S. and foreign economic data as factors that contributed to these developments.

Nominal Treasury yields posted notable declines and the expected path of policy shifted down considerably over the period. Equity prices declined, on net, and corporate bond spreads widened. However, financing conditions for businesses and households generally remained supportive of economic growth."


US data ends the week


On Friday, the US Producers Price Index will be released at 12:30 GMT. The event has caused moves from 9.0 to 35.6 pips. Although, note that the 35.6 pip move was actually caused by other announcement being made at the same time as the PPI was published.

For more information watch this week's Economic Calendar Analysis

GBP/USD short-term review

During the previous trading session, the GBP/USD exchange rate tested the weekly PP at 1.2574. During today's morning, the pair was testing the resistance level formed by the 200-hour SMA and the monthly S1 at 1.2545.

If the given resistance holds, it is expected, that a reversal south could occur in the nearest future. However, note, that the currency pair could be supported by the 55– and 100-hour SMAs, currently located circa 1.2500.

If the given support does not hold, the rate could decline to the psychological level at 1.2480.

Otherwise, it is likely, that the pair could try to surpass the weekly PP within the following trading hours.

Hourly Chart



On the daily candle chart one can observe that the rate remains in the borders of a descending channel pattern. Namely, the pair is targeting the lower channel line.

The trend line was located on Wednesday at the 1.2420 level.

Daily chart


Traders remain long


On Thursday morning, 75% of open position volume was long.

By the middle of Friday's London trading, 72% of open GBP/USD position volume on the Swiss Foreign Exchange was in long positions.

Meanwhile, trader set up pending orders in the 100-pip range were neutral, as 51% of orders were set to buy. Previously, 58% of orders were set to buy.

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