- 57% of orders are to acquire the Pound
- Market sentiment is now equally divided between bulls and bears
- The Bollinger band around 1.4615 is the main short-term resistance
- Support is at 1.4467, namely the weekly PP
- 54% of traders reckon GBP/USD will be at 1.46 or lower in three months
- Upcoming events: US Labor Market Conditions Index, UK Trade Balance, US JOLTS Job Openings, US Wholesale Inventories, US Mortgage Delinquencies
Last Friday and over the weekend the British currency experienced mixed performance The largest gain of 1.30% was registered against the Aussie, while other gains were also seen against commodity-based currencies, namely 0.76% against the Kiwi and 0.57% against the Loonie. Losses, however, were detected against the Swissie (0.79%), the Greenback (0.59%), the Yen (0.54%) and the Euro (0.18%).
The US economy created fewer jobs in January than expected, but rising wages and the unemployment rate at an eight-year low signalled the labour market recovery remains strong. Non-farm payrolls rose by 151,000 jobs last month, missing expectations for a 190,000 gain and following 292,000 new jobs created in December. Yet, it appeared to be enough to push the US jobless rate to 4.9%, down from 5.0%, the Labor Department reported. In January, all the employment gains were in the private sector, which added 158,000 jobs. The services sector dominated the payrolls increase last month, with 118,000 jobs created. The labour participation rate rose to 62.7%, near four-decades low. Fed Chairwoman Janet Yellen said the US economy needs to create just under 100,000 jobs a month to keep up with growth in the working age population. The data came on heels of a private sector report, which showed 205,000 jobs were created in January.
In addition to that, average weekly earnings increased 12 cents an hour or 0.5% on a monthly basis, translating into a 2.5% annualized gain. Until recently, wage growth has been the one factor missing from America's recovery from the recession. As the unemployment rate remains low, many economists expect Americans to see paychecks increase.
Yet another uneventful Monday
The only relevant economic data release today is the US Labor Market Conditions Index. It is designed to estimate labour market activity, but usually has close to no impact on the market prices, as most indicators used in its calculations were already released. Thus, more attention should be directed towards Tuesday, when the UK Trade Balance is released. It is released by the National Statistics and is a balance between exports and imports of goods. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the GBP. If a steady demand in exchange for UK exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the GBP. Furthermore, the US JOLTS Job Openings are also due on Tuesday, it is the number of job openings during the reported month, with exception of the farming industry. According to the forecasts, improvements are expected in both economic data releases, thus the impact on the Cable could be rather muted.
GBP/USD in limbo around 1.45
The Cable took a beating on Friday, as the exchange rate edged closer to the 1.45 psychological level, mostly due to a decline in US Unemployment Rate. The pair remains rather weak and might retreat towards the 1.44 major level in the upcoming days, demand around which is strong. However, the weekly PP at 1.4467 is the immediate support today and could contribute to a small corrective rally today, with the nearest resistance located only around 1.4615, represented by the Bollinger band.
Daily chart
With the breach of the one-week bullish trend last week, the Cable could now begin declining. the 200-hour SMA circa 1.4410 is expected to provide some support and keep the pair from edging too low. The long-term bearish trend is also intact, suggesting the pair might appreciate towards the resistance trend-line, up to 1.4950.
Hourly chart
Three brokers - three sentiments
Market sentiment is now equally divided between bulls and bears, whereas the portion of buy orders increased over the weekend. There are now 57% of orders to acquire the Pound (previously 52%).
The clients of the other two brokers seem to have different opinions on GBP/USD. OANDA traders are bullish on the UK currency. Right now, 63% of them are long (59% on Friday). At the same time, Saxo Bank traders are net short the currency pair: 39% of open positions are long and 61% are short.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.50 in three months
The majority of traders (54%) believe the British currency is to cost 1.46 or less dollars after a three-month period. The most popular price interval was divided between by two intervals, namely 1.48-1.50 and 1.50-1.52, both selected by 13% of the voters, while the second most popular choice implies the Pound is to cost between 1.40 and 1.42 dollars in three months, chosen by 12% of the surveyed. At the same time, the mean forecast for May 08 is 1.4473.