- 54% of pending orders in the 100-pip range are to SELL
- 53% of open positions are to BUY
- Rate faces significant resistance circa 1.3415
- Upcoming events: UK Average Earnings Index 3m/y, UK Claimant Count Change, UK Unemployment Rate, US CPI m/m, US Core CPI m/m, FOMC Economic Projections and Statement, Federal Funds Rate, FOMC Press Conference, FOMC Member Brainard to speak
The British Pound received only temporary support from the UK data indicating the country's inflation at the six-year high in November. The GBP/USD exchange rate rose 17 pips or 0.12%, but weakened rapidly and failed to sustain the position, continuing trading in the 1.3320 area.
Britain's inflation accelerated growth pace unexpectedly, causing a tighter squeeze of household incomes. The Office for National Statistics stated that consumer inflation hit a yearly rate of 3.1% in November, driven by computer games, air fares and chocolate prices, reflecting the Sterling's plunge after the Brexit vote. The current rate, being more than 1% above the BoE target, would force the Bank's Governor to write a letter about further steps to the UK Finance Minister.
US Federal Funds Rate
This session includes fundamentals from both the UK and the US. The British Office for National Statistics is to release the Average Earnings Index and Unemployment Rate for October and Claimant Count Change for the previous month at 0930GMT.
The US Bureau of Labour Statistics will publish the country's CPI and Core CPI for the previous month at 1330GMT. In addition, various fundamentals from the Federal Reserve are scheduled for 1900GMT, namely, the FOMC Economic Projections and Statement, as well as the Federal Funds Rate. Its press conference is planned for 1930GMT.
GBP/USD slides to 1.3338
Until release of data on the American PPI, the cable was moving below the monthly PP, as expected. But then publication of better than anticipated result led to active appreciation of the buck, which pushed the rate through support zone located between the 1.3338 and 1.3331 marks.
Accordingly, yesterday's trading session the pair ended near the 1.3300 psychological level. As this support line crosses the bottom boundary of a senior descending channel, the Pound should try to restore some value today. However, the fact that it is simultaneously moving in other two descending channels makes such scenario unlikely.
Moreover, the pair constantly experiences pressure from the slipping 55- and 100-hour SMAs. But most importantly is that expectations of the upcoming interest rate hike increases bearish sentiment that might result in a deep plunge to the 1.3230 mark.
Hourly chart
Despite attempts to move above the monthly PP at 1.3772, the Pound lost 24 pips against the Greenback on Tuesday. As a result, the pair remained between the monthly PP and the weekly S1.
As apparent on the chart, no additional daily support/resistance levels are restricting the Pound; thus, intraday signals might be more helpful at showing possible points of reversal.
Meanwhile, technical indicators are tended southwards, thus pointing to possible decline this week.
Daily chart
The SWFX market sentiment has become bullish on Wednesday, with 53% of open positions being long (+3%). In addition, 54% of pending orders are to buy the Sterling (+2%).
OANDA traders remain bearish, as 53% of open positions are short (+2%). Saxo Bank clients share the same sentiment with 58% short positions (-1%).
Spreads (avg, pip) / Trading volume / Volatility