- Pending orders in 100-pip range from the current market price have changed from negative to neutral (50% bullish / 50% bearish)
- The pair could fall in value, with the closest support at 1.55586 (weekly S1)
- An advance is also a possibility, but it should be limited by the weekly PP at 1.5672
- Upcoming events: US Building Permits, US Housing Starts, US Flash Manufacturing PMI, UK Bank Stress Test Results, BOE Financial Stability Report, BOE Governor Carney Speaks, UK CPI
Industrial production in the world's number one economy rose in November as factories increased output of cars, machinery, clothing and other goods, a sign of surging demand for American products amid falling oil prices. Industrial production, which measures the output of US manufacturers, utilities and mines, soared a seasonally adjusted 1.3% from the previous month, according to the Fed. That followed a gain of 0.1% in October, revised up from the earlier reported 0.1% decline. Capacity utilization, an indicator of slack in the industrial sector, rose to 80.1% in November, the highest rate since March 2008 and compared with October's revised reading of 79.3%. Overall industrial output in November increased 5.2% from a year earlier.
At the mean time, the British manufacturing sector is ending 2014 on a more positive note, after having lost some steam earlier in the year. UK manufacturing orders rose at the fastest pace in four months in December, according to the Confederation of British Industry's survey results, which also showed a brighter outlook for the near term. The total order book balance from the CBI monthly industrial trends survey picked up to 5 compared with 3 a month earlier. Over the three months through December, orders balance advanced to 13, above historical standards of 2. With export orders improving, output is forecasted to continue growing in the coming months.
News grom UK will lead the parade
This Tuesday is more about the UK, as its bank stress test results and the BOE financial stability report will be seen, later on its Governor Carney will be speaking as well. Additionally, UK's CPI and PPI input will be released. Meanwhile, US building permits and housing starts will be released and also the flash manufacturing PMI that is expected to increase from the previous month.
GBP/USD dives beneath 1.57
Already for more than a month GBP/USD is testing the strength of the down-trend, especially its upper trend-line, that started to take its shape on July, when the pair reached a six-year high at 1.7193. The pair has left the boundaries of the down-trend; however, without a sharp advance.The pair continues to trade around the 1.57 level, since it is unable to break the monthly PP at 1.5755 and there still is a downside risk of the pair falling lower, if it fails to prolong its advance.Daily chart
The GBP/USD cross has failed to surpass the monthly PP at 1.5755 repeatedly and that has dragged the pair below the weekly PP that is located at 1.5672. Moreover, the majority of the daily and weekly technicals are pointing to the downside; therefore, with this additional pressure the pair is likely to return to trade in the boundaries of the longer-term downtrend.
Hourly chart
Open positions and pending orders neutral
Also, the share of buy commands has narrowed, and the amount of buy orders dropped from 71% to 50%. It proclaims that, if the pair appreciates, in the near-term it may be stopped by the monthly PP and is likely to be pushed to the downside by this substantial resistance level.
Although, in case the pair returns to trade in the boundaries of the down-trend then the bearish pressure may become even stronger in the foreseeable future.
Spreads (avg,pip) / Trading volume / Volatility
Community expects Pound to return to its down-trend's boundaries
Likerty, one of the community members participating in the survey, thinks that there is a bigger possibility of a continuous bearish movement by saying "judging by developments on other majors, probability for extensive bearish scenario looks more realistic". However, he adds that "strong short term volatility is highly probable in this area and bullish trend could bring Pound back for 1.59's".
Meanwhile, traders, who were asked regarding their longer-term views on GBP/USD between Nov 11 and Dec 11 expect, on average, to see the currency pair at 1.5721 by the mid-March. Though the largest portion of participants, namely 17% of them, believe the exchange rate will rebound to the 1.60/1.62 region in sixty days. Additionally, 45% of the market participants see the pair falling below the 1.56 mark.