On Wednesday, the GBP/USD passed the support of the 55 and 100-hour simple moving averages. Afterwards, the rate touched the lower trend line of an ascending channel pattern at 1.2135.
In accordance with the pattern, the rate should begin a surge. Although, a move upwards would face the 55, 100 and 200-hour simple moving averages at 1.2146, 1.2159 and 1.2197.
Institute for Supply Management released the US Non-Manufacturing PMI data, which came out worse-than-expected of 53.7 compared with the forecast of 55.5.
Anthony Nieves, Chair of the Institute for Supply Management (ISM) Non-Manufacturing Business Survey Committee commented: "The NMI registered 53.7 percent, which is 1.4 percentage points lower than the June reading of 55.1 percent. This represents continued growth in the non-manufacturing sector, at a slower rate. This is the index's lowest reading since August 2016, when it registered 51.8 percent. Respondents indicated ongoing concerns related to tariffs and employment resources. Comments remained mixed about business conditions and the overall economy."
UK economic data
On Friday, a data release from the UK is expected at 8:30 GMT. Namely, the UK GDP and Manufacturing Production will be released.
Although, note that the previous data release of this type caused only a nine pip move.
GBP/USD short-term review
During the previous trading session, the GBP/USD exchange rate reversed south from the upper boundary of the short-term ascending channel at 1.2205.During today's morning, the currency pair declined to the lower channel line at 1.2133. From a theoretical point of view, it is expected, that a reversal north could occur soon. It is unlikely, that the pair could exceed 1.2212 due to the resistance level—the weekly PP.
However, note, that the rate is pressured by the 55-, 100– and 200-hour SMAs, currently located in the 1.2146/1.2198 range. Thus, if the given channel does not hold, some downside potential could prevail in the market. A possible target is the 2018/2019 low at 1.2092.
Hourly Chart
A review of the daily candle chart has revealed that the rate has been in a smaller scale descending channel pattern that represents the rate's sharper decline, which began at the start of May.
The pattern's lower trend line is strengthening the support of the weekly S1 at 1.2038.
Daily chart
By the middle of Wednesday's London trading session the sentiment had decreased to 72% long.
Meanwhile, trader set up pending orders in the 100-pip range were neutral as 50% of orders were set to buy and 50% were to sell.
Previously, 64% of orders were set to sell.