By the middle of Thursday's London trading session the GBP/USD was trading between simple moving averages below the 1.2700 level.
In general, our hourly candle chart analyst states that the rate most likely could trade sideways in the near term future.
Institute for Supply Management released the US ISM Non-Manufacturing PMI data, which came out better-than-expected of 56.9 compared with forecast of 55.6.
According to the official release: "he NMI registered 56.9 percent, which is 1.4 percentage points higher than the April reading of 55.5 percent. This represents continued growth in the non-manufacturing sector, at a slightly faster rate."
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.
Click Here: ECB Preview Video
GBP/USD short-term review
Yesterday, the GBP/USD exchange rate reversed south from the upper boundary of the short-term descending channel at the 1.2740 mark. During Thursday's morning, the rate was testing the support level formed by the 100– and 200-hour SMAs located circa 1.2660.If the given support holds, it is likely, that some upside potential could prevail in the market, and the currency pair could re-test the upper channel line. Note, that the pair has to surpass the 55-hour SMA, currently located at 1.2693.
On the other hand, the pair could trade sideways between the given moving averages in the short term. Also, it is unlikely, that the rate could decline lower than the 1.2648 mark due to the support of 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
Read More: Technical Analysis
Traders remain long on GBP/USD
Since 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 has not retraced down enough for the bulls to close their positions.
Meanwhile, trader set up pending orders in the 100-pip range had become bullish, as 57% of orders were set to buy.
Since 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 has not retraced down enough for the bulls to close their positions.
Meanwhile, trader set up pending orders in the 100-pip range had become bullish, as 57% of orders were set to buy.