Another drop of the GBP/USD was caused by a fundamental Brexit announcement. Namely, the Prime Minister of the United Kingdom announced requested an extension of the Brexit deadline.
The GBP/USD started to plummet like a brick, as the PM did not announce a clear plan of action.
The British Pound depreciated against the US Dollar, following the UK CPI data released on Wednesday at 09:30 GMT. The GBP/USD exchange currency rate lost 13 pips or 0.10% during a minute, right after the release. The British Pound continued trading at the 1.3235 area against the US Dollar.
The Office for National Statistics released UK CPI data that came out better-than-expected of 1.9% compare with forecasted 1.8%.
Mike Hardie, head of inflation at the ONS, said: "The rate of inflation is stable, with a modest rise in food as well as alcohol and tobacco offset by clothing and footwear prices rising by less than they did a year ago."
Busy week for fundamental events
This week will be busy for fundamental announcement traders. Both the central banks and various statistics offices are set to make various announcements.On Wednesday, at 18:00 GMT the Federal Reserve will publish their FOMC Statement, Economic Projections and the Federal Funds Rate. Moreover, the event will be followed by the FOMC Press Conference.
This event is above all else during this week, as the FOMC sets the value of the US Dollar. In general, the rest of the world's central banks just adapt to the Federal Reserve.
On Thursday, all attention will be on the UK events. At 09:30 GMT the UK Retail Sales will be published. Afterwards, at 12:00 GMT the Bank of England will announce their official Bank Rate and Monetary Policy Summary. The BoE in general is expected to react to the recent Brexit developments and the Federal Reserve.
On Friday, there will be two notable data releases. At 08:30 GMT the German Markit PMIs will be released. They are expected to cause a significant impact on the EUR pairs.
The last event of the week will be the Canadian CPI and Core Retail Sales release at 12:30 GMT.
For more information watch this week's economic calendar analysis stream.
GBP/USD short term review
At the moment of the review the rate was sharply falling, as the market reacted to the latest announcement. With it the rate broke all technical support levels and ended this week's sideways trading.In general, the rate faces two support levels, which might stop the decline. A monthly pivot point at 1.3129 and a weekly support level at 1.3045.
Meanwhile, take into account that fundamental adjustments of asset prices like the one currently taking place, usually ignore all technical levels.
Hourly Chart
On the daily chart the drop is occurring in the borders of a long term ascending channel pattern.
Note that the rate might get additional technical long term support from the 55- day simple moving average at 1.3014 and the 200-day simple moving average at 1.2985.
Daily chart
On Tuesday, on the Swiss Foreign Exchange of the total open position volume 61% was short.
Meanwhile, the pending orders are no longer bearish. Instead in the 100-pip range near the rate 53% of pending orders were set to buy. The orders had become almost neutral.