- 59% of all pending orders are to buy the Pound
- 63% of all open positions are long
- Possible upside limit for this session located near the 1.3178 mark
- Significant support rests circa 1.3001
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Upcoming Events: UK CPI y/y, UK PPI Input m/m, UK RPI y/y, US Import Prices m/m, BOE Governor Carney Speaks
Consumer prices in the United States were flat, while retail sales dropped for the second consecutive month in June. The Labour Department reported on Friday that its CPI registered an unchanged reading in the observed month, missing market expectations for a 0.1% rise, as the cost of mobile services and gasoline declining. On a yearly basis, the index surged 1.6% in June, continuing to ease from February's 2.7%, when it showed the strongest gain in five years. Furthermore, the so-called core inflation rose by the same margin of 0.1% for the third straight month.
Meanwhile, the country's retail sales registered a 0.2% drop in the reported month, affected by declines in receipts at supermarkets, clothing stores and service stations. Data showed the largest monthly fall of 1.3% in gas station sales. Overall, economists suggested that the weaker-than-expected reports are set to diminish expectations for the Fed to raise interest rates for the third time this year, with inflation being the main uncertainty factor to define the course of further monetary policy changes.
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UK in focus
Tuesday's trading session will start with six data sets from the UK at 0830GMT, the most significant of which are the monthly CPI, PPI and RPI. Subsequently, the US is to publish monthly prices on imported goods and services at 1230GMT. Lastly, the BOE Governor Mark Carney is to speak at the unveil of the new £10 note in Hampshire at 1330GMT.
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GBP/USD changes sentiment on Tuesday
GBP/USD was driven by slight momentum downwards on Monday that led the pair towards the 55-hour SMA circa 1.3040. This level, however, was no reached, as morning bulls reversed its direction north. Afterwards, the Sterling continued to move upwards, but with very limited gains. In case fundamental events do not change the current market sentiment, the pair is likely to edge higher and close with gains. Immediate resistance is set by the upper channel line circa 1.3120, while more significant upside barrier is the monthly R1 at 1.3177. In case the rate falls, the 55-hour SMA should support it from further depreciation. By and large, the Pound is expected to trade somewhere near the upper channel boundary on Wednesday morning.
Hourly chart
It seems that the GBP/USD currency pair has once again resumed its upward momentum and may eventually test the 38.2% Fibonacci retracement at 1.3146. Another resistance located near this level is the monthly R1 at 1.3177. Meanwhile, a relatively distant support cluster is formed by the 55-hour SMA and the monthly PP circa 1.2900.Daily chart
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Market sentiment remains neutral
Market sentiment has remained at the same level, as 63% of open positions are long. In addition, 59% of set up orders are to buy the Pound.
On the contrary, traders at Saxo Bank are bearish on the pair, with 67% of traders holding short positions (unchanged from Monday). Moreover, 56% of OANDA clients hold short positions.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound falling
© Dukascopy Bank SAThe majority of traders believe that the Cable may fall below the 1.30 mark three months from now, as 51% (-9%) of survey participants share this belief. The current spot price is around 1.3101, while the average forecast for October 18 is 1.2975 (1.2920 on Friday). The 1.24-1.26 range remains the most popular price interval, having 38% of the votes (-2%).