Wednesday's surge ended at the weekly R2 simple pivot point at 1.3176. The GBP/USD touched this level and began a decline.
On Thursday morning, the currency exchange rate had declined to the 1.3100 level and had no technical support as low as 1.3050.
UK CPI Caused a Surge
The Office for National Statistics released the UK CPI data, which came out better-than-expected of 0.5% compared with the forecast of 0.4%.
According to the official release: "The largest contribution to the CPIH 12-month inflation rate in September 2020 came from recreation and culture (0.31 percentage points). Transport costs, and restaurant and café prices, following the end of the Eat Out to Help Out scheme, made the largest upward contributions (of 0.23 and 0.21 percentage points, respectively) to the change in the CPIH 12-month inflation rate between August and September 2020."
Economic Calendar
On Thursday, the weekly US Unemployment Claims will be out at 12:30 GMT. The GBP/USD has moved from 7.4 to 11.3 pips on the publication.
On Friday, the GBP/USD currency exchange rate could be impacted by the UK and US Markit Services and Manufacturing Purchasing Managers Indices.
The UK data could cause a move from 18.5 to 25.0 pips at 08:30 GMT. Afterwards, at 13:35 GMT the US PMIs could cause a move from 8.8 to 21.2 pips.
Click on the link below to find out more about the data releases.
GBP/USD short-term review
The GBP/USD decline was expected to reach the support of the 1.3050 mark. At that level the rate would find psychological support of the round exchange rate level. In addition, the weekly R1 and the 55-hour simple moving average would provide support at that level.Afterwards, in the case of the 1.3050 support failing the rate would reach the monthly pivot point at 1.3028. In the case of the pivot point not holding, next support would be the 1.3000 mark and the 100 and 200-hour simple moving averages.
On the other hand, if the 1.3050 holds, the rate should retrace back up to the 1.3100 mark.
Hourly Chart
On the daily candle chart, as expected, the 55-day simple moving average was broken.
In addition, the 1.3084 October high level was broken.
Daily chart
Read More: Technical Analysis
Traders go short
On Thursday, 57% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Wednesday, 51% of volume was in short positions.
Meanwhile, in the 100-pip range around the rate the pending orders were 67% to buy the GBP/USD pair.
On Thursday, 57% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Wednesday, 51% of volume was in short positions.
Meanwhile, in the 100-pip range around the rate the pending orders were 67% to buy the GBP/USD pair.