Another sudden sharp move has occurred due to a fundamental announcement. Namely, Theresa May is visiting Brussels.
This announcement and all the information that surrounds it caused optimism in the GBP, which propelled the currency exchange rate to surge above the 1.3060 level.
Note that the results of today's talks are still set to be revealed. Combine that with the FOMC Meeting Minutes later in the day. The result is a fully fundamental trading day.
The British Pound depreciated against the US Dollar, following the UK Average Earnings Index and Unemployment Rate release on Tuesday at 09:30 GMT. The GBP/USD exchange currency rate lost 12 pips or 0.09% during a minute, right after the release. The British Pound continued trading at the 1.2920 area against the US Dollar.
However, note that there was a sudden surge of the same range just prior to the release. Essentially the event just caused a volatility increase.
The Office for National Statistics released UK Average Earnings Index data that came out lower-than-expected of 3.4%, compared to forecast 3.5%.
However, note that there was a sudden surge of the same range just prior to the release. Essentially the event just caused a volatility increase.
Busy week for the US and the UK
This week will have various data releases in various countries that will influence many currency exchange rates.The main event of the week will be the release of the Federal Open Markets Committee Meeting Minutes today. The FOMC Meeting Minutes will be published at 19:00 GMT. They are expected to cause an impact on all USD pairs.
On Thursday, EUR traders will pay attention to the Markit released European Services and Manufacturing PMIs. The German release at 08:30 GMT is the most important.
Later on during the same day the US Durable Goods Orders and Core Durable Goods Orders will be published.
The week will end with the Canadian Core Retail Sales at 13:30 GMT on Friday.
All of these events are scheduled to be covered by Dukascopy Analytics on our Dukascopy Webinars YouTube channel. The streams start ten minutes before the data release.
For more information watch the weekly Calendar Analysis stream recording.
GBP/USD short term review
After the sharp surge on Tuesday the GBP/USD pair was heading downwards. The pair had passed below the support level at 1.3060.The pair had no support as low as the 1.2980 region. At that level the rate would have by 16:00 GMT on Wednesday the 55-hour SMA, weekly R1 and the lower trend line of a just drawn ascending channel pattern.
Meanwhile, note that any announcement from the talks between the UK and the EU will cause a move that most likely will ignore all technical levels.
Hourly Chart
On the daily chart it can be seen that the rate broke the resistance of the 200-day simple moving average. The SMA now was set to strengthen the support of the 1.3000 level.
Meanwhile, on Wednesday an ascending channel pattern was drawn on the daily chart. It was done by using the low levels of February and December and setting a parallel line on the high level of January.
This pattern could guide the rate higher. However, that is highly unlikely due to the fundamental background.
Daily chart
By the middle of Wednesday's trading session the sentiment had become 52% short. Most likely some short term traders want to take advantage of the current retracement down.
Although, the trader set up pending orders were signalling that selling might occur, as 54% of all orders in the 100-pip range were set to sell on Tuesday
By the middle of Wednesday's trading 64% of orders in the mentioned range were set to buy. In general, the almost neutral traders are prepared to buy.