On Friday morning, the GBP/USD currency exchange rate plummeted 188 pips or 1.41%.
The drop was attributed to the President of the European Commission Ursula von der Leyen announcing to the European Summit that a no-deal Brexit is currently the most likely scenario.
In the meantime, UK officials stated that a no-deal Brexit would be a "choppy" road.
Moreover, the Governor of the Bank of England Andrew Bailey revealed during the day that the central bank is limited in its tools to reduce market volatility in the current environment.
During the drop, the rate broke the support of the 1.3250 mark. However, it stopped at mid-day GMT hours at the 1.3150 level.
Economic Calendar
The week for UK events is set to start on Wednesday at 07:00 GMT. At that time the UK Consumer Price Index is set to be published. This event has caused moves from 9.7 to 22.2 pips on the GBP/USD since July.
On the same day, at 09:30 GMT the UK Manufacturing and Services PMIs are set to be published. This event has caused moves from 13.0 to 21.0 pips.
In addition, on Wednesday, the US Retail Sales and US Core Retail Sales could cause a move on the chart at 13:30 GMT. The rate has moved 10.3 to 25.7 pips on the announcements.
Moreover, on that day the US Flash Manufacturing and Services Producers Managers Indices or PMIs are set to be published at 14:45 GMT. The GBP/USD has moved from 7.8 to 35.5 pips on this publication.
The day would end with the top event of the whole calendar. The US Federal Reserve is set to publish their Federal Funds Rate and FOMC Statement at 19:00 GMT. However, this is one of the three times when the FOMC Economic Projections are published. During the publication of the projections the GBP/USD has moved 68.5 pips in June and 36.4 in September.
Despite the Fed having the top event, in theory, there have been larger GBP/USD moves due to another event. Namely, the Bank of England's publication of the Official Bank Rate and Asset Purchase Facility information has caused moves from 40.0 to 73.1 pips since May. The publication will occur on Thursday at 12:00 GMT.
Also on Thursday, at 13:30 GMT the US Unemployment Claims could create a move of 13.0 to 25.8 pips.
The week for GBP/USD traders will end at 13:30 GMT on Friday with the release of the UK Retail Sales at 07:00 GMT. Expect a move from 6.4 to 16.0 pips.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
GBP/USD short-term review
As mentioned, the GBP/USD passed the support of the 1.3250 and declined until it found support in the 1.3150 level and surged. During US trading hours, the rate had returned to the 1.3250 mark, and the 1.3250 level began to provide resistance.If the 1.3250 level caused a decline, the rate could reach once again the 1.3150 level. If the 1.3150 holds, the rate would trade sideways between these two levels. In the case of the 1.3150 failing, the rate would aim at 1.3100.
On the other hand, a breaking of the 1.3250 level should result in a surge to the 1.3300 level, which could be strengthened by the pivot point at 1.3310 and the 55, 100 and 200-hour SMAs.
Hourly Chart
On the daily candle chart, the rate failed to pass the resistance of the 1.3450 mark, which stopped the rate's summer surge and most recently also the autumn recovery.
On Friday, the rate was reached by the support of the 55 and 100-day simple moving averages. These levels provided support at 1.3128 and 1.3094. Moreover, they signalled that the rate is no longer overbought, as it had been since early November.
Daily chart
Read More: Technical Analysis
Short sentiment decreases
Since Tuesday, 70% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Thursday, the sentiment decreased to being only 66% short. By the middle of Friday, it was 63% short.
Meanwhile, in the 100-pip range around the rate the pending orders were 64% to buy the GBP/USD pair.
Previously, the orders were 76% to buy.
Since Tuesday, 70% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Thursday, the sentiment decreased to being only 66% short. By the middle of Friday, it was 63% short.
Meanwhile, in the 100-pip range around the rate the pending orders were 64% to buy the GBP/USD pair.
Previously, the orders were 76% to buy.