The GBP/USD on Wednesday was continuing the previously started surge. The rate was still aiming at the resistance pf the pivot point at 1.2735.
At that level the rate is expected to wait for the support of the approaching simple moving averages.
Last Thursday, the Bureau of Economic Analysis released the US Prelim GDP data, which came out in line with expectations of 3.1%.
According to the official release: "Today's estimate reflects downward revisions to non-residential fixed investment and private inventory investment and upward revisions to exports and personal consumption expenditures (PCE). Imports, which are a subtraction in the calculation of GDP, were revised up; the general picture of economic growth remains the same."
No significant UK data during the week
On Thursday, all attention will be on the European Central Bank. At 11:45 GMT the Monetary Policy Statement will be published. On the release the EUR/USD has moved from 10 to 35 pips.
The event will be followed by the ECB press conference at 12:30 GMT. During the questions and answers session at the end of it the EUR is bound to make sharp moves.
At the same time the Canadian Trade Balance will be published. This event has caused moves from ten to sixty pips.
The week will end with the Canadian and US employment data being published at 12:30 GMT. This event consists of five different data sets being released.
For more details watch the Economic Calendar Overview. Moreover, feel free to ask questions for details.
GBP/USD short-term review
During the previous trading session, the GBP/USD exchange rate reached the psychological level at 1.2700.The rate could continue to extend gains in the short run. However, the currency pair has to surpass the resistance level formed by the weekly R1 at 1.2735. If it does not hold, the pair could reach the psychological level at 1.2760.
If the given resistance holds, it is expected, that the pair could trade sideways, trying to surpass it. Also, it is unlikely, that the rate could tumble lower than the 1.2648/1.2673 range due to the support cluster formed by the 55-, 100– and 200-hour SMAs, as well the weekly PP.
Hourly Chart
On the daily candle chart, there were signals showing that the pair is oversold. Namely, all of the daily simple moving averages were located above the 1.2950 level.
In addition, a new descending channel pattern was added to the chart. It could be seen that the recent surge was consistent with the pattern, as the rate bounced off the channel's lower trend line.
Daily chart
By the middle of Wednesday's trading session 72% of open GBP/USD open position volume was in long positions.
Traders remain long on the pair, as it slowly but steadily surges. The open positions are booking profits.
Meanwhile, trader set up pending orders in the 100-pip range were bearish, as 55% of orders were set to sell.
The orders were previously neutral. It can be assumed that these sell orders are the take profits of the long positions that would be closed when the pair reaches the 1.2735 level.