The GBP/USD started the week with a gap down and a following decline to the 1.3200 level. The move was attributed to the UK and EU failing to negotiate trade and troubles with the coronavirus.
Namely, over the weekend there were statements made by one of the UK Ministers, which signalled that the UK would not back down from its position on trade with the EU. Moreover, the minister of health announced a new strain of the coronavirus in its country. The news forced various countries to shut off travel to the UK.
Economic Calendar
The week of Christmas is set to have an early market closing on Thursday in many countries and reduced liquidity due to people being on holidays. However, there are still noteworthy data sets being released in the days before people are off from work.
All of the data releases of the week are scheduled to occur on 13:30 GMT.
Namely, on Tuesday, the US Final GDP could cause volatility. The GBP/USD moved from 10.9 to 39.4 pips on the release since September 2019.
Last but not least, on Thursday, the US Durable Goods Orders and Core Durable Goods Orders data will be released. The rate has moved from 9.5 to 21.9 pips on the announcement since July 2020.
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
During Monday morning hours, the GBP/USD exchange rate dropped below the 1.3300 level.It is likely that the currency pair could gain support from the weekly S2 located at 1.3133. Thus, a reversal north could occur, and the pair could try to exceed the resistance area formed by the weekly S1 and the 200-hour SMA in the 1.3330/1.3410 range.
However, if the predetermined support level does not hold, the exchange rate could continue to trade downwards in the short term. Note that the nearest possible support level—the weekly S3, is located at 1.2984.
Hourly Chart
On the daily candle chart, the rate has bounced off the resistance of the channel up pattern, which has guided it since the start of October.
The following decline found support in a combination of three technical levels. Namely, the lower trend line of the channel up pattern, the 55-day simple moving average and a 61.80% Fibonacci retracement levels. All of these levels are strengthening the support of the 1.3200 round exchange rate level.
Due to the described levels above and the lack of more close by support on the hourly candle chart. It is suggested to observe the daily candle chart as the main instrument for future guidance.
Daily chart
Read More: Technical Analysis
Traders take profits
On Friday, 73% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Monday, 68% of volume was short, as some traders most likely had taken profits from the decline.
Meanwhile, in the 100-pip range around the rate the pending orders were 65% to sell the GBP/USD pair.
On Friday, 73% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Monday, 68% of volume was short, as some traders most likely had taken profits from the decline.
Meanwhile, in the 100-pip range around the rate the pending orders were 65% to sell the GBP/USD pair.