- The number of purchase orders remains unchanged at 60%
- 51% of all open positions are long
- Immediate resistance is around 1.2910
- The closest support is at 1.2745
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Upcoming events: UK Public Sector Net Borrowing, US HPI, US CB Consumer Confidence, US New Home Sales
Friday's data on British retail sales surprised many experts who did not expect such a notable change in March. According to the ONS, sales in the retail sector dropped 1.8% on a seasonally-adjusted basis, while analysts anticipated only a 0.3% decrease. Similarly, on a quarterly basis, retail sales lost 1.4%, which was the first negative contribution to GDP growth since the Q4 of 2013. The following decline was a result of a change in average store prices, which were continuously increasing since January. In fact, in March, consumer prices reached the highest peak since December 2014.
In addition, in volume terms, goods bought in most of the sub-sectors, except for department stores and household goods stores, decreased. For instance, the amount of money spent in food stores in March advanced 0.3%, while the amount of purchased goods diminished 0.5% compared to the previous month. In contrast to traditional retail sales, data on online stores showed that British consumers in March spent on average 1.0B pounds per week on online stores, a 19.5% rise compared to the same period a year ago. Retail sales are tightly connected to consumer spending. Thus, weak retail sales combined with rising inflation suggest that consumer spending will unlikely provide a significant support to economic growth.
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US HPI, New Home Sales and Consumer Confidence
Today attention turns to three US macroeconomic data releases. First of all, the US HPI, as it provides an estimated value of housing market conditions. It is an important indicator, as the housing market is considered as a sensitive factor to the US economy. Second, the US New Home Sales, which is an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes, so as a result the demand for goods, services and the employees is stimulated. Finally, the US Consumer Confidence, which is released by the Conference Board. It captures the level of confidence that individuals have in economic activity. A high level of consumer confidence stimulates economic expansion, while a low level drives to economic downturn.
Read More: Fundamental Analysis
GBP/USD stuck between 1.2750 and 1.2850
As was anticipated, the Sterling began the week on the back foot, having lost 45 pips against the US Dollar yesterday. The decline was a good sign, as it confirmed the Cable's current consolidation trend, which began after last week's strong 278-pip surge. The GBP/USD pair remains anchored to the 1.28 major level, thus, no significant development is expected to occur today. However, according to technical indicators, the bullish momentum today is likely to prevail, but with the 1.2850 mark still being the intraday ceiling, as it marks the consolidation trend's upper boundary.
Daily chart
On the hourly chart there were no changes over the day, as the GBP/USD pair remained within the borders of a downsliding channel pattern. The outlook is also unchanged, with breakout expected to occur on Thursday (most likely to the upside), when the US Durable Goods Orders are to be released. The up-trend and the 200-hour SMA are to contribute to the upside direction.Hourly chart
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Traders are equally divided
Bulls and bears finally broke out of equilibrium, but market sentiment still remains neutral, with 51% of all open positions being long. Meanwhile, the number of purchase orders remains unchanged at 60%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 55% of all open positions are short and the remaining 45% are long. Meanwhile, sentiment at Saxo Bank worsened again over the day, with 52% of traders now being short and the other 48% being long the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.26 major level, as 57% of survey participants believe so. While the current price is around 1.28, the average forecast for July 255 is 1.267. The 1.30-1.32 range is now the most popular price interval, having 17% of the votes, while on the second place is the 1.28-1.30 one, with 15% of poll participants choosing it. Furthermore, the 1.18-1.20 and the 1.34-1.36 intervals were each selected by 11% of the voters.