- 56% of all pending orders are to buy the Pound
- 58% of all open positions are long
- The possible upside limit rests at 1.3030
- Significant support rests circa 1.2883
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Upcoming Events: UK Construction PMI
Manufacturing activity in Britain slowed unexpectedly last month, a private survey showed on Monday. Markit report showed that its PMI for the UK manufacturing sector came in at 54.3 points in June, falling to a three-month low from a downwardly-revised figure of 56.3 in the preceding month. However, analysts expected a smaller decline to 56.4 for the month from May's originally reported 56.7.
Growth of the country's manufacturing output slowed as businesses showed smaller increases in demand for new domestic orders, while export orders marked the weakest pace of growth in five months. Though, some economists expect the UK economy to show stronger growth in the Q2 with stronger competitiveness boosted by the weak Sterling. However, export orders are set to put downward pressures on further economic expansion. Meanwhile, overall confidence weakened to a seven-month low amid the beginning of the Brexit talks and more uncertainties surrounding the UK outlook. Opposite to Britain's faltering manufacturing sector, manufacturing activity in other EU countries rose to its highest level in six years in June.
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Lack of fundamentals in this session
The sole fundamental data scheduled for the following 24 hours is the Construction PMI released at 0830GMT. Banks in the United States, however, are closed due to Independence Day.
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GBP/USD limited by 100-hour SMA
The Pound responded negatively to weak UK Manufacturing PMI mid-Monday, thus pushing the rate through the bottom channel boundary. The subsequent action did not form any distinctive direction and resulted in slight volatility sideways. The 100-hour SMA was breached to the downside with little hindrance; however, it did continue to function effectively as a resistance level. It seems that the bearish sentiment may prevail in the upcoming hours prior to edging higher late Tuesday. Immediate support is formed by the 100– and 55-hour SMAs at 1.2958 and 1.2983, respectively. Nevertheless, the main upside limit is considered to be circa 1.3029, as the Sterling had already failed to overcome this level for two consecutive sessions, thus forming a double top.
Hourly chart
On the daily chart, the pair continues to be stranded between the monthly PP and the 38.2% Fibo at 1.2883 and 1.3121, accordingly. The former is likewise reinforced by the 55-day SMA. By and large, no significant changes in the given range are expected to occur today.Daily chart
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Bearish sentiment prevails
Market sentiment remains at the same level on Tuesday, as 58% of open positions are long. Likewise, 56% of set up orders are to buy the Pound.
On the contrary, traders at Saxo Bank remain bearish on the Sterling, with 64% of traders holding short positions (66% previously). Moreover, 63% 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 is to fall below the 1.28 mark three months from now, as 56% (+0%) of survey participants share this belief. The current spot price is around 1.2946, while the average forecast for October 4 is 1.2775 (unchanged from Monday). The 1.24-1.26 range remains the most popular price interval, having 25% of the votes.