- 66% of pending orders in the 100-pip range are to SELL
- 58% of traders are bullish on the Sterling (+4%)
- Gains could be capped near 1.4150
- Upcoming events: US JOLTS Job Openings, IBD/TIPP Economic Optimism
The Sterling fell sharply against the US Dollar, after the report by Markit on the UK services industry. The GBP/USD exchange rate decreased 24 base points or 0.17% to the 1.4123 mark and continued to decline.
Britain's economy revealed notably slower growth in January with the recent survey casting doubts on stronger investors' expectations that the Bank of England was about to raise rates in the following months. IHS Markit released its survey showing that the UK economic growth is likely to slow to 0.3% in the Q1, after a 0.5% gain in the last quarter of 2017. The weakening was mostly triggered by the country's dominants services industry, where activity growth decreased to the lowest level in 16 months of 53.0 in January.
Quiet session
No significant fundamentals are scheduled for this session. The US Bureau of Labour Statistics is to release the JOLTS Job Openings at 1500GMT, while the US TechnoMetrica Institute of Policy and Politics will publish the IBD/TIPP Economic Optimism; the time for this release is tentative.
GBP/USD stops near 38.20% Fibo
Bears have dominated GBP/USD for the second consecutive session. The slight recovery apparent on Monday morning was stopped by the 55-, 100– and 200-hour SMAs and the bottom boundary of a seven-week ascending channel circa 1.4150. As a result of this strong momentum south, the Sterling breached the monthly PP and was halted solely by the 38.20% Fibo near the 1.3950 mark.
Technical indicators are converging and are located in the strongly bearish territory, thus bulls might try to use this opportunity to push the rate higher. A possible upside target for today could be near 1.4150 where all the three moving averages are located.
In case bulls fail to move the rate above 1.40, a subsequent fall down to 1.3850 is likely.
Hourly chart
The British Sterling plunged 1% against the US Dollar on Monday, thus breaching the resistance of the monthly PP and the weekly S1 circa 1.40. The pair was trading in the green area early today, thus trying to re-gain some lost positions.
In terms of longer-term perspective, the Pound has reached the upper boundary of the previously-breached channel up circa 1.40. Thus, the pair might form a retracement north within this week.
Daily chart
SWFX market sentiment remains bullish today, as 58% of traders are holding long positions, compared to 54% on the previous session. Meanwhile, 58% of pending orders are still to sell the Pound (+3%).
The bearish sentiment of OANDA traders has weakened to 61% of all open positions being short (-3%). Saxo Bank clients share the same sentiment with 59% short positions (-1%).
Spreads (avg, pip) / Trading volume / Volatility