- 76% of pending orders in a 100-pip range are to sell the pair
- 68% of traders are bullish on the Pound
- Significant resistance is located near the 1.2950 mark
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Upcoming Events: UK Retail Sales m/m, US Unemployment Claims, Philly Fed Manufacturing Index, US Capacity Utilisation Rate, US Industrial Production, FOMC Member Kaplan speaks
A combination of the stronger-than-expected average earnings growth and lower unemployment in the UK contributed to a sharp increase in the GBP/USD. The Sterling appreciated against the US Dollar by 40 base points or 0.31% to reach the 1.2896 mark, and, despite some weakness during the session, managed to finish it near the 1.2890 level.
The ONS reported that average earnings increased 2.1% year-over-year during three months to June, boosted by strong rise of 27% in bonus payments over the course of June alone. Meanwhile, the UK unemployment fell to the lowest level since 1975, edging down to 4.4% in the reported period. However, analysts expect the tepid economic growth to affect jobs further, as wages continued subdued increase.
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Awaiting fundamentals
Thursday's economic calendar will start with UK Retail Sales for the month of July at 0830GMT. The rest of the session, however, is allocated to the United States. It is set to release weekly unemployment claims and Philadelphia Fed Business Outlook Survey at 1230GMT, as well as Capacity Utilisation Rate and monthly Industrial Production at 1315GMT. The session will end with the President of the Federal Reserve Bank of Dallas Robert Kaplan speaking about the Texas economy and monetary policy at the Lubbock Chamber of Commerce at 1630GMT.
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GBP/USD surpasses 1.2880
Despite edging higher in the wake of solid earnings data, the Pound failed to sustain its upward momentum on Wednesday and returned near the 1.2850 mark—a level already proven to be a strong support. The rate managed to accelerate in the second half of the session and push through the weekly S2 and the 55-hour SMA at 1.2885. By and large, the Pound is expected to appreciate against the Greenback today, setting the weekly and monthly S1s as a near-term target. Reinforced by the 100-hour SMA, this area could be a possible stopping point. Meanwhile, weak fundamentals may guide the pair back to 1.2850.
Hourly chart
Following the exchange rate's plunge on Tuesday, the lower boundary of the wedge was altered southward to adapt to the new situation. Yesterday's close in the green area provided the first confirmation that this may be a possible reversal point. However, this new formation needs more confirmative candles. The rate was halted by the 100-day SMA for two consecutive days, demonstrating that the rate is struggling to move below this level. Thus, a successful breach may be a solid indication to a continuous down-trend. The nearest resistance is formed by the 55-day SMA and the weekly and monthly S1s circa 1.2950.Daily chart
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Sentiment remains neutral
The bullish sentiment has increased slightly on Thursday, with 68% of open positions being long (+2%). Meanwhile, the number of pending orders has swiftly turned bearish, currently standing at 61% to sell and the Pound (+11%).
Meanwhile, traders at Saxo Bank are bearish on the pair, with 61% of traders holding short positions (+1%). The same bearish sentiment is shared by OANDA where 51% of open positions are likewise short (-5%).
Spreads (avg, pip) / Trading volume / Volatility