On Monday morning, the GBP/USD plummeted. The drop was caused by news that the Prime Minister of the United Kingdom, Boris Johnson could withdraw from the trade talks with the EU. The news were reported by The Sun.
From a technical analysis perspective, the currency exchange rate dropped below the support of the 1.3300 mark and began to trade just above the 1.3250 mark.
Economic Calendar
There are couple of macroeconomic data releases expected that could move the GBP/USD rate.
On Thursday, the US CPI data sets and the Unemployment Claims are set to be published at 13:30 GMT.
The week is set to end with the US Producers Price Index, which has caused moves from 11.1 to 36.2 pips.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
GBP/USD short-term review
In the aftermath of the fundamental drop, the rate started to find support in the 1.3250 level. In theory, the rate should consolidate by trading sideways above this level.However, do not rely on technical analysis, as the rate is bound to adjust to EU-UK trade talk news until the situation is resolved.
Hourly Chart
On the daily candle chart, note that the rate is overbought, as the 55 and 100-day simple moving averages were located near the 1.3085 level.
Meanwhile, note that the rate managed to pierce the August high level, which ended the rate's summer surge. It indicates that the GBP/USD could push through this level, if there are positive fundamental news to the GBP.
Daily chart
Read More: Technical Analysis
Short sentiment declines
On Friday, 71% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Monday, 64% of open position volume was in short positions. It can be assumed that a portion of traders took profits during the Monday's drop.
Meanwhile, in the 100-pip range around the rate the pending orders were 72% to buy the GBP/USD pair.
On Friday, 71% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Monday, 64% of open position volume was in short positions. It can be assumed that a portion of traders took profits during the Monday's drop.
Meanwhile, in the 100-pip range around the rate the pending orders were 72% to buy the GBP/USD pair.