- The number of sell orders dropped from 59 to 58%
- 75% of all open positions are long
- Immediate resistance is at 1.2531
- The closest support is still around 1.24
- Upcoming events: UK BBA Mortgage Approvals, UK Second Estimate GDP, US Goods Trade Balance, US Markit Services PMI
New orders for US manufactured durable goods rose markedly last month, driven by higher demand for machinery and other equipment, official figures revealed on Wednesday. Overall, new orders for capital goods jumped 4.8% in October, according to the US Department of Commerce. Meanwhile, market analysts anticipated a slight acceleration to 1.2%. The September figure was revised down from -0.1% to -0.3%. Demand for transportation equipment jumped 12% during the reported month, the largest gain since October 2015. Back in September, new orders for transportation equipment climbed 0.4%. Excluding orders tied to transportation, core durable goods orders increased 1.0%, following September's downwardly revised gain of 0.1% and surpassing the 0.2% rise market forecast. The US economy is set to expand at a 3.6% annual pace in the Q3, after growing 2.9% in the previous quarter.
Separately, the Department of Labor reported on Wednesday the number of Americans filing for unemployment benefits increased to 251,000 in the week ending November 18, up from the prior week's 233,000, whereas analysts expected a milder rise to 241,000.
Relatively uneventful Thursday
Being that there is a bank holiday in the US today, there are not many fundamental events that could have an impact on the GBP/USD pair's performance. The only relevant event is the UK BBA Mortgage Approvals, which measures the number of home loans issued by the BBA during the previous quarter. It is considered as a leading indicator of the UK Housing Market. A Mortgage growth represents a healthy housing market that stimulates the overall UK economy. However, on Friday attention should be paid to the UK Second Estimate GDP, which shows the monetary value of all the goods, services and structures produced within a country in a given period of time. It is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Since this is the second release – the impact on the market is likely to be limited.
GBP/USD struggles to climb higher
In spite of extremely good US Durable and Core Durable Goods Orders readings, the Cable still managed to erase all intraday losses and end the day with a 21-pip surge yesterday. This suggests that the demand area around the 1.24 major level, formed by the 20-day SMA, the weekly and the monthly PPs, is strong enough to keep the GBP/USD pair afloat. Moreover, the given support cluster is also reinforced by a seven-week up-trend, which received an additional confirmation on Wednesday. Even though there is sufficient room for another bearish development of approximately 70 pips, technical indicators are unable to confirm this scenario, also suggesting that bulls might take over.
Daily chart
The Sterling is having some trouble appreciating against the US Dollar, namely climbing over the 200-hour SMA. Nevertheless, the up-trend remains intact for the moment, meaning that the bullish trend is still prevailing. However, downside risks are still present, as wedge patterns, where the Cable is located in right now, are usually end with downside breakouts.
Hourly chart
Traders mostly bullish
Exactly three quarters (75%) of all open positions are long today, while the number of sell orders dropped from 59 to 58%.
A similar situation is observed elsewhere. For example, 61% of positions open at OANDA are currently long. This is more than the share of shorts (39%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 65% of traders being long and 35% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect no major changes
By the end of the next three months traders expect the Cable to be higher than the level where it is now. While the current price is around 1.24, the average forecast for November 24 is 1.2346. Furthermore, the 1.14-1.16, the 1.18-1.20 and the 1.26-1.28 intervals are now the most popular ones, having 13% of the votes each. On the second place in terms of the votes is the 1.16-1.18 (11%) interval, followed also by the 1.20-1.22 interval with only 10% of the votes. Moreover, 55% all survey participants believe the Cable is to fall under 1.24.