Not only was the start of the trading week accompanied by an empty economic calendar but also by a complete lack of any news capable of influencing the foreign exchange market. Nevertheless, the market is still acting as if there are constantly some significant announcements being made or extremely important data being released. This was particularly true for yesterday. The extent of the US dollar's weakness is truly surprising. It's likely due to the market's situation. Everyone is waiting for tomorrow's European Central Bank's Governing Council meeting, and it's entirely possible that major institutional investors have simply taken a pause, leading to localized conditions of thin trading. As a result, basic speculative operations by smaller players could have led to a market imbalance. This is indicated by the fairly rapid pullback.

It is reassuring to know that at least some economic reports that the market may consider important will finally be released today. So, speculative fervor will calm down a bit, giving way to a bit more rational thinking. We are talking about preliminary PMI data, which will determine the nature of today's trading. However, all business activity indices in the United Kingdom are likely to increase, although not significantly. On the other hand, a decline is forecasted for the US PMI data, especially in the manufacturing sector. Therefore, the pound may return to the levels from which its decline started yesterday.

GBP/USD experienced high volatility and momentarily fell by almost 100 pips. However, by the end of the trading day, the exchange rate returned to the middle of the channel at 1.2700.

On the four-hour chart, the RSI technical indicator shows that there is a similar cyclical movement, in line with price fluctuations within the range. Initially, there was a break above the 50-level, followed by a rebound.

On the same time frame, the Alligator's MAs are intersecting each other, which confirms the relevance of the existing range-bound market.

Outlook

Despite the relatively high volatility, there have been no significant changes. The price continues to move within the sideways channel of 1.2600/1.2800. Therefore, you may still consider the tactic of trading with bounces from the specified boundaries. It is important to remember that the longer the price moves within a closed range, the more attention it attracts from speculators. Eventually, we will see a breakout from the range.

The complex indicator analysis revealed that in the intraday and short-term periods, technical indicators are pointing to a bullish sentiment in the channel's structure.