- 70% of pending orders in the 100-pip range are to sell the pair
- 58% of traders are bullish on the Pound
- Important resistance level is located near 1.3158
- Upcoming Events: UK Manufacturing Production m/m, UK Goods Trade Balance
The Institute for Supply Management reported that its PMI for the US non-manufacturing sector posted weaker-than-expected increase to 55.3 in August, following the prior month's figure of 53.9.
An expansion was fuelled by strong increase in new orders and employment, suggesting the weaker job growth registered last month was temporary. Data indicated the US economy is set to gather momentum early in the Q3.
UK Manufacturing Production
The most important fundamental events in this session come from the UK early in the morning. The country is to release its monthly Manufacturing Production and Goods Trade Balance at 0830GMT. There are likewise other minor data sets from both UK and the US, but they are unlikely to affect the market in any way.
GBP/USD tries to reach 1.3158
An upside momentum provided by the junior ascending channel in conjunction with release of information on the Halifax HPI as well as Mario Draghi speech helped the Pound to break through the upper trend-line of a senior descending channel. On the one hand, the pair has all chances to continue the surge towards the weekly RR3 at 1.3158. On the other hand, the further direction will very depend on release of data on the UK Manufacturing Production. If the numbers will be negative, the pair might slip back until a combined support set up by the weekly R2 at 1.3077 and the approaching 55-hour SMA.
Hourly chart
The Sterling continues its appreciation period with a close in the green area for the third consecutive day. The pair tried to surpass the 38.2% Fibonacci retracement on Friday morning, but this level provided a strong resistance. The Pound is currently stranded between the aforementioned Fibo level and the weekly R3 from above and the weekly R2 from below. The British currency has breached the upper Bollinger band, thus suggesting that there might be a change in pair's direction within the next week.
Daily chart
Bullish sentiment deteriorates
SWFX traders have started to decrease their strong bearish sentiment, as the number of long positions has fallen to 58% (-4%). This change in sentiment is likewise apparent on pending orders which are 64% to sell the Pound.
OANDA traders are increasingly bearish on the pair, as 53% of open positions are short (+2%). Moreover, traders at Saxo Bank are likewise bearish with 61% short positions (-5%).