On Wednesday morning the GBP/USD had retraced back up to the resistance line near the 1.3000 level. This surge exceeded the expectations of Dukascopy Analytics.
In general, one should watch the 1.3000 level. If the rate surges above it, the 1.3030 will be aimed at. On the other hand a descent back down to 1.2910 might occur.
The British Pound appreciated against the US Dollar, following the UK Average Earnings Index and Unemployment Rate release on Tuesday at 09:30 GMT. The GBP/USD exchange currency rate gained 7 pips or 0.05% during a minute, right after the release. The British Pound continued trading at the 1.2910 area against the US Dollar.
The Office for National Statistics released UK Average Earnings Index data that came out better-than-expected of 3.4%, compared to the forecasted 3.3%. Note, that the UK Unemployment Rate was released at the same time with the UK Average Earnings Index.
The Office for National Statistics comments: "Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 3.3% excluding bonuses, and by 3.4% including bonuses, compared with a year earlier".
Quiet week for macro releases
As it is accustomed, the third week of the month is expected to be rather empty for macroeconomic data releases. Although, there are a couple of releases to look forward to this week.On Wednesday, look forward to the Canadian Retail Sales data release at 13:30 GMT. This event most likely will be the only one notable enough during the rest of the week to be traded by currency release traders.
On Thursday, main attention of fundamental event traders will be on the ECB Rate Announcement at 12:45 GMT. The volatility on the EUR charts usually increases during the ECB Press Conference, which will start at 13:30 GMT.
Meanwhile, oil traders will most likely catch a one percent move at 15:30 GMT. The data release has been providing moves of more than one percent during the last month and a half.
GBP/USD short term review
The hourly chart shows how the currency exchange rate has reached the upper trend line of the dominant descending pattern.In general, the trend line will be tested. If it fails to keep the GBP/USD down, the rate will be expected to surge up to the 1.3030 level where the weekly R1 is located at.
On the other hand, if the resistance level holds its ground, it will force the currency exchange rate downwards to the support cluster near the 1.2910 mark. At that level the 55 and 100-hour simple moving averages are located together with a monthly pivot point.
Hourly Chart
On the daily chart one can observe that the dominant trend line is not of the largest active pattern of the GBP/USD. Instead there is a larger trend in force. In accordance with that pattern, the rate could surge to 1.3030.
At that level the upper trend line of the larger pattern is located together with the weekly R1, monthly R2 and the 200-hour simple moving average.
Daily chart
Meanwhile, trader set up pending orders in the 100-base point range were no longer short. Previously 60% were short. On Wednesday, the orders were balanced 50/50 buy versus sell orders.
As the pair surged, traders shorted it and now sit on those short positions without having stop losses close by.