By the middle of Tuesday's London trading hours, the GBP/USD had reached the level, where it was located before Boris Johnson's Conservative election victory.
In general, the rate was expected to continue to decline until it reaches technical support levels near 1.3115.
Economic Calendar
On Wednesday, the UK CPI is scheduled to be released at 09:30 GMT. This event could create a move from 13.6 to 20.8 pips.
On Thursday, at 09:30 GMT, the United Kingdom Retail Sales data will be made public. The Retail Sales could cause a move from 12.0 to 15.9.
On the same day, at 12:00 GMT, the event of the week for the Pound will take place. The Bank of England Official Bank Rate and the Bank of England Monetary Policy Summary will be published.
On Friday, two data release should be watched by the GBP/USD traders. The UK Current Account with 8.3 to 38.4 pips at 09:30 GMT and the US Final GDP with 8.1 to 52.0 pips at 13:30 GMT.
Meanwhile, the week's scheduled event historical data tables have been published. Click on the link below to read the article.
Read More: 16.12-20.12 Event Historical Reactions
GBP/USD short-term review
During the second half of Tuesday's London trading session, the GBP/USD was heading down to the 1.3115 level. At that level, the rate would meet with the support of the December low levels and the simple monthly R2 pivot point.If these levels stop the decline of the pair, the rate could trade sideways below the 1.3150 level or surge up to the 50.00% Fibonacci retracement level near 1.3200.
If the 1.3115 fails to hold, the rate should test the support of the weekly S1 pivot point at 1.3090.
Hourly Chart
On the daily candle chart, the rate's jump and decline were consistent with the channel up pattern.
Note on the pattern that the 1.3510 level is the last technical resistance level before the upper trend line of the pattern near 1.3700.
In the meantime, the pattern's lower trend line is strengthening the support of the weekly S1 near 1.3090.
Daily chart
Read More: Technical Analysis
Short sentiment declines
On Monday, 73% of open GBP/USD position volume on the Swiss Foreign Exchange was in short positions.
By the middle of Tuesday's trading session, the sentiment was 66% short.
Meanwhile, trader orders were almost bullish. In the 100-pip range, 71% of orders were buy and 29% were to sell.
The orders were 54% to buy on Monday.
By the middle of Tuesday's trading session, the sentiment was 66% short.
Meanwhile, trader orders were almost bullish. In the 100-pip range, 71% of orders were buy and 29% were to sell.
The orders were 54% to buy on Monday.