On Friday, GBP/USD signalled that it will drop down to the 1.2970 level. Namely, the rate passed the support levels near 1.3000 level.
At the 1.2970 level the currency exchange rate was expected to meet with the support of the 200-hour simple moving average.
The British Pound appreciated against the US Dollar, following the UK Official Bank Rate release on Thursday at 11:00 GMT. The GBP/USD exchange currency rate gained 38 pips or 0.29% right after the release. The British Pound continued trading at the 1.3055 level against the US Dollar.
The Bank of England released the Official Bank Rate data that came out in line with expectations of 0.75%. Note, that the UK Monetary Policy Summary and Inflation Report were released at the same time.
According to the official release: "The Committee assume a smooth adjustment to the average of a range of possible outcomes for the United Kingdom's eventual trading relationship with the European Union. They are also conditioned on a path for Bank Rate that rises to around 1% by the end of the forecast period, lower than in the February Report. As with UK financial conditions more generally, that path has been heavily influenced by recent global developments, with forward interest rates in the United States and the euro area falling markedly."
US employment data ends the week
On Friday, the US Employment data sets will be published at 12:30 GMT. This event is considered the second most important release for the USD. However, due to three data sets having individual impact on the USD the range of the volatility increase is wide during the data release.Meanwhile, check out the previous data release covers and economic calendar analysis on the Dukascopy Webinars YouTube channel.
GBP/USD short-term review
On Thursday, the GBP/USD exchange rate traded sideways around the monthly PP at the 1.3033 mark.Given that the rate is trading near the lower boundary of the short-term ascending channel at 1.3020, it is expected, that a reversal north could occur in the nearest future. In this case, the pair has to surpass the resistance formed by the 55-hour SMA at 1.3049.
However, if the given resistance holds, it is likely, that the exchange rate could trade sideways between the given SMA and the weekly R1 at 1.3006. It is unlikely, that bears could prevail in the market, and the British Pound could decline lower than the 200-hour SMA at 1.2970.
Hourly Chart
On the daily candle chart, the 100 and 200-day simple moving averages began to provide support on Friday, these levels were the reason for the rate not continuing its decline.
Meanwhile, take into account that the 55-day SMA together with the weekly R2 provided resistance during the previous two trading sessions at 1.3090 and reversed the surge.
Daily chart
Since Thursday, 51% of all open position volume was in short positions.
Meanwhile, trader set up pending orders in the 100-pip range were neutral. Namely, 52% of all orders were set to sell.
Previously, 58% of orders were set to sell.