The GBP / USD pair resumed its bullish momentum yesterday, as a result of which the quote updated the local high and consolidated above the level of 1.2940.

Speculative activity was abundant in the market, so regardless of negative statistics, say in the United Kingdom, demand for the pound still rose because of the emotional mood of market participants.

Thus, if we look at the M15 chart and analyze all trades set up yesterday, we will see that a bunch of long positions arose at 14:45, resulting in a local move in the GBP / USD pair.

Afterwards, short positions also surged in the market, so as a result, volatility came out at 135 points, which is 8.5% above the average level.

If we recall the dynamics of volatility last September, the average daily value is just 134 points, 8% higher than the average level. And, if we compare it with the dynamics last August, there is an acceleration of volatility by 18.5%, which is the highest record since March, and indicates an increase in speculative activity.

August - 113 points

July - 99 points

June - 127 points

May - 109 points

April - 118 points

March - 269 points

Here is the general picture of volatility for September:

September: Tuesday - 125 points; Wednesday - 119 points; Thursday - 112 points; Friday - 142 points; Monday - 132 points; Tuesday - 193 points; Wednesday –138 points; Thursday –262 points; Friday - 100 points; Monday - 143 points; Tuesday - 110 points; Wednesday - 132 points; Thursday - 132 points; Friday - 86 points; Monday - 190 points; Tuesday - 156 points; Wednesday - 101 points; Thursday - 90 points; Friday - 116 points; Monday - 176 points; Tuesday - 78 points; Wednesday - 135 points.

In addition, as discussed in the previous review , activity surged because market participants based their strategy on the slowdown observed on September 29.

So, in the daily chart, the movement appeared as a correction from 1.3480 to 1.2674, the scale of which is about 34%.

With regards to news, the final data on the UK 2nd quarter GDP was published, and it revealed that economic recession accelerated from -1.7% to -21.5%, which indicates big problems to the UK economy. Fortunately, there was no market reaction to this statistics.

Meanwhile, in the afternoon, ADP published its employment change report on the US private sector, where it indicated an increase in jobs by 749,000 in September, instead of the forecast of 610,000. The previous figures for August were also revised upwards from 428,000 to 481,000.

Almost at the same time, the final data on the US 2nd quarter GDP was also released, and, instead of a decline of -9.1% in annual terms, a decline of just -9.0% was recorded. In quarterly terms, it decreased to -31.4% instead of the forecast of - 31.7%.

Although these indicators were better than expected, the market did not react as well, so the GBP / USD pair continued to move based on speculative operations.

In that regard, the emotional mood of market participants remain affected by the news on Brexit, as well as grim updates on the coronavirus.

Many British experts are already claiming that the virus is out of control, and even the UK Chief Scientific Adviser, Patrick Vallance, said that things are definitely going in the wrong direction, so more restrictive measures may be required.

If this continues, the situation will deteriorate even further, which is detrimental to the UK economy.

In the meantime, today, a bunch of macroeconomic statistics are to be published, one of which is the data on jobless claims in the United States. According to forecasts, initial applications could reduce from 870,000 to 855,000, while repeated applications could decrease from 12,580,000 to 12,300,000.

Further development

As we can see in the trading chart, the pound arose and updated the local high, but due to the retaliation of the European Union against the United Kingdom, which is a possible lawsuit from the European Court of Justice, which the President of the European Commission, Ursula von der Leyen, will speak on soon, the GBP / USD pair could decline in the market, in the direction of values 1.2770 - 1.2700.

Indicator analysis

Looking at the indicators on the different time frames (TF), we can see that the minute period already signals sell, while the hourly period is on the verge emitting the same, all due to high speculative activity in the market. Meanwhile, the signal on the daily period is still ambiguous, so further observation is still needed.

Weekly volatility / Volatility measurement: Month; Quarter; Year

Volatility is measured relative to the average daily fluctuations, which are calculated every Month / Quarter / Year.

(The dynamics for today is calculated, all while taking into account the time this article is published)

Volatility is currently at 129 points, which exceeds the usual or average level. However, it may rise even further if activity accelerates more in the market.

Key levels

Resistance zones: 1.2885 *; 1.3000 ***; 1.3200; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.

Support Zones: 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411).

* Periodic level

** Range level

*** Psychological level

Also check trading recommendations for the EUR/USD pair here, or brief trading recommendations for the EUR/USD and GBP/USD pairs here.