- The Swiss market is 54% bearish
- 74% of pending orders in the 100-pip range are set to SELL
- US releases and Federal Reserve in focus
As the EU declined UK's Brexit offers, the GBP/USD dropped like a rock. The rat had fallen almost down to the 1.3050 mark, breaking once more all patterns. However, most Dukascopy long traders had taken profits from the pair days before the event. In addition, there were more short trades than long open during the drop, indicating that profits were once more gained.
The British pound appreciated against the US Dollar, following the United Kingdom CPI data release on Wednesday at 08:30 GMT. The GBP/USD exchange currency rate gained 39 pips or 0.30% during a minute, right after the release. The rate continued trading at the 1.3181 level.
The Office for National Statistics released United Kingdom CPI data that came out better-than-expected of 2.7%, compared to forecasted 2.4%. The CPI data release is considered the UK's most important inflation data because it's used as the central bank's inflation target.
Mike Hardie, the ONS' head of inflation said in a statement:"Consumers paid more for theatre shows, sea fares and new season autumn clothing last month. However, mobile phone charges, and furniture and household goods had a downward effect on inflation".
Minor data until Wednesday
Prepare for Tuesday, as CB Consumer Confidence data release will most likely cause a small reaction in the financial markets. The data release is set to occur at 14:00 GMT, and it will be covered by the Dukascopy Analytics team.
Although, the most important day of the week for fundamentals will be Wednesday. The weekly US Crude Oil Inventories will be published at 14:30 GMT. The cover webinar for the release, will start as usual at 14:20 GMT.
Meanwhile, the most important data release will be the release of the US Federal Funds Rate. The Federal Reserve is expected to hike their interest rate to 2.25% from 2.00% at 18:00 GMT. The event will be also covered by Dukascopy Analytics live.
GBP/USD short term review
After the big drop, buying occurred. The following surge of the GBP/USD met with the resistance of the 200-hour simple moving average at 1.3125. If this resistance level holds its ground, from a technical perspective the rate should fall down to the 1.2990 level, where the weekly S1 is located at.Meanwhile, the rate could break the 200-hour SMA and approach next resistance levels in the range from 1.3140 to 1.3186.
Hourly Chart
The volatility caused by the fundamental events initially forced the rate into reaching medium term bullish targets at 1.3300 earlier than expected.
Although, the medium pattern is broken. Most likely new patterns will be spotted, as the markets fully take into account the new information about the Brexit process.
Daily chart
The bearish sentiment of Swiss Foreign Exchange remains almost unchanged on Monday. 54% of open positions were short on Monday, compared to 53% on Friday.
In the meantime, trader set up orders, which indicate where the rate most likely will go next, are set to sell the pair in 53% of all cases. The orders previously were set to buy in 55% of all cases.
The traders, which were short on Friday, most likely profited from the decline. However, either they have not closed their short positions or other traders are chasing the decline, as there are even slightly more bearish positions on Monday.
Spreads (avg, pip) / Trading volume / Volatility