As expected, the GBP/USD reached the support of the weekly pivot point at 1.3089. It bounced off it as soon as the 55-hour simple moving average approached from below and provided additional support.
The rate began a surge, which on Tuesday was expected to reach the 1.3160 level.
On Thursday, May 2, the Bank of England Monetary Policy Committee voted to hold the Bank Rate unchanged at 0.75%.
According to the Bank of England Inflation Report, the UK CPI inflation is falling moderately below the medium-term target of 2%. However, inflationary pressure is expected to lessen later this year, as the British Pound might recover from the fall in world trade and business confidence.
The Bank's decision might indicate the start of smooth transition to new trading relationships with the EU bloc.
UK data on Friday a top priority for GBP/USD
This week all the action on the US Dollar from a fundamental side will be in the second half of the week. Meanwhile, there are large events to watch prior to that.On Wednesday, at 02:00 GMT the Reserve Bank of New Zealand will make their rate announcement. This event has caused moves larger than 100 pips during the last two announcements. If you trade sudden moves, get on this, stay late or wake up early.
On Thursday, the usual data starts. At 12:30 GMT the Canadian Trade Balance and the US Producers Price Index will be released. These events can cause a move from five to eighty pips. The range is explained in the weekly Economic Calendar Overview video.
On Friday, there will be two times to watch the calendar.
At 08:30 GMT the UK GDP and Manufacturing Production will be published. This event can cause a move of fifteen to twenty pips.
At 12:30 GMT the Canadian Employment data will cause a move of about forty pips. At the same time the US Consumer Price Index release should cause a move of up to twenty pips. Combined they can have various impacts on the Forex market.
Watch this week's economic calendar analysis and leave comments with questions about the specifics.
GBP/USD short-term review
The currency exchange rate is being pushed up by the 55-hour simple moving average, which on Tuesday morning was located just below the 1.3100 level.The pair is expected to reach the resistance of a Fibonacci retracement level at 1.3160.
On the other hand, the rate might trade sideways and wait up for both the 55 and 100-hour simple moving averages to catch up.
Hourly Chart
On the daily candle chart, the 55-day simple moving average was broken during the Friday's volatility.
Since Monday, the simple moving average was providing support to the currency exchange rate.
Daily chart
On Monday, traders went short, as 54% of total open position volume was in short positions.
On Tuesday morning, the sentiment had become 57% short. More traders opened short positions and closed long positions.
Meanwhile, trader set up pending orders in the 100-pip range had become neutral. Namely, 51% of all orders were set to sell.