During Tuesday morning, the GBP/USD exchange rate surpassed the psychological level at 1.2000.
Bears could continue to prevail in the market, as the rate is pressured by the 55-, 100- and 200-hour moving averages.British Pound depreciates on Brexit tensions
On Monday, September 2, the British Pound depreciated 105 pips or 0.86% against the US Dollar. Note, that the Pound also depreciated against other major currencies.
The reason for the drop is the news that the British opposition lawmakers are planning to propose legislation to oblige the UK Government to suspend Brexit.
The UK Prime Minister Boris Johnson claimed that he would purge any member of the UK Parliament who would vote against the Government on Brexit.
Economic Calendar
This week there are a couple of US data releases on the economic calendars that are shown as high impact.
Today, at 14:00 GMT the US ISM Manufacturing PMI might impact the GBP/USD rate. Since April the announcement has caused moves from 13.2 to 25.4 base points.
On Thursday, the US ADP Non-Farm Employment Change will be published at 12:15 GMT. Although, note that this is one of the releases that should not have a high impact mark and be discussed by financial media, as it has lost its power to impact the financial markets.
Due to that reason, since October 2018 our analysts ignored this data release. Recently, due to the possibility that it might have regained its strength, data was checked. Five minutes after the data release there were moves from 12.9 to 14.8 pips on GBP/USD chart. A fifteen pip range is normal volatility for the GBP/USD.
On Friday, US employment data will be published. The event will have three numbers being revealed – the Average Hourly Earnings, Non-Farm Employment Change and Unemployment Rate.
Due to each of the numbers impacting the rate differently by pushing the value of the USD up or down and with a different strength, the event has a wide range. Namely, since April the GBP/USD has moved from 14.8 to 34.1 pips due to the US labour data.
GBP/USD short-term review
Yesterday, the GBP/USD exchange rate tried to surpass the support level formed by the weekly S2 at 1.2036. During Tuesday morning, the rate declined below 1.2000.Given that the currency pair is pressured by the 55-, 100– and 200-hour SMAs, currently located in the 1.2121/1.2199 range, it is likely that bears could prevail in the market in the short run. Note that the pair could face the support of the weekly S3 at 1.1932.
It is unlikely that some upside potential could prevail in the market, and the British Pound could exceed the weekly S1 at 1.2102 against the US Dollar. Also, it is unlikely, that the rate could drop lower than the monthly S2 at 1.1870.
Hourly Chart
On the daily candle chart, the rate has bounced off the resistance of a dominant channel down pattern.
Moreover, the rate is being forced into a decline by the resistance of the montly pivot point at 1.2116.
If the rate trades consistent with the pattern, it is set to decline in the borders of the pattern until the end of September.
Daily chart
Read More: Technical Analysis
Traders remain long
On Tuesday morning, SWFX sentiment was 71% long. Despite the drop, traders are remaining long on GBP/USD.
On Monday, the sentiment was 62% long.
Meanwhile, trader set up pending orders in the 100-pip range were bullish, as 70% of orders were set to buy and 30% were to sell.
On Tuesday morning, SWFX sentiment was 71% long. Despite the drop, traders are remaining long on GBP/USD.
On Monday, the sentiment was 62% long.
Meanwhile, trader set up pending orders in the 100-pip range were bullish, as 70% of orders were set to buy and 30% were to sell.