After reaching above the previously set target of 1.3160 and touching the 1.3180 level, the GBP/USD dropped.
By the middle of Wednesday's trading session, the rate had reached down to the 1.3000 level. The future short term forecasts were based on what happens at that 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 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
On Wednesday, the GBP/USD broke the support of the previously drawn ascending channel pattern and the combined technical support of the 200-hour simple moving average and a pivot point near 1.3030.By the middle of the day's London trading session the pair was about to test the support of the weekly S1 at 1.2997 and the psychological support that the 1.3000 level provides.
If this level gets passed, the rate could fall down to the 1.2940 level, where a Fibonacci retracement level is located at.
Hourly Chart
On the daily candle chart, the rate was squeezed in between the resistance of the 55-day simple moving average near 1.3090 and the support of the 100-day SMA at 1.3000.
If the 1.3000 level gets passed, the 200-day simple moving average could provide support near 1.2960.
Daily chart
On Tuesday morning, the sentiment had become 57% short.
By the middle Wednesday's London trading, the sentiment was 54% short. Short positions were closed, as the bears took profits from the decline.
Meanwhile, trader set up pending orders in the 100-pip range had become bullish. 55% of orders in that range were set to buy.