- The portion of orders to sell the Pound returned to its Wednesday's level of 64%
- 64% of all open positions are long today
- Expect a sell-off from 1.3170
- Support is around 1.2925
- 53% of traders reckon GBP/USD will be at 1.30 or higher in three months
- Upcoming events: US Retail and Core Retail Sales, US PPI and Core PPI, Reuters/Michigan Consumer Sentiment
According to the Labour Department Thursday's release, the number of people filing for unemployment benefits went down during the last week, figuring out that stable labour market strength in early August that could help speed up economic growth. The number of Americans filing for unemployment benefits dropped 1,000 to a seasonally adjusted 266,000 in the August 6 week. Initial claims have been below the key 300,000 level for the past 75 weeks in a row, showing the longest streak since 1970 as well as did not depict any signs of rising. Meanwhile, economists polled by Reuters had forecast initial claims reaching the 265,000 mark in the latest week. Also, Labour Department highlights there were no special factors influencing last week's claims data and no states had been estimated. Moreover, summer usually brings turbulences in weekly figures due to the re-equipment of auto plants. However, this summer, weekly claims figures have been more or less consistent, around 270,000 or fewer for the past eight weeks.
The another report showed the US natural gas futures plunged to a two-month low in North America, after data revealed that natural gas supplies in storage in the US added more than forecasted last week.
US Retail Sales, US PPI and Reuters/Michigan Consumer Sentiment
Once again all attention turns to the US fundamentals, such as the Retail Sales. The Retail Sales measure the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. The Core Retail Sales, however, exclude the automobile sector. At the same time, the PPI is due. It is the measure of the average changes in prices in primary markets of the US by producers of commodities in all states processing. In the Core PPI volatile products such as food and energy are excluded in order to capture an accurate calculation. Finally, the Reuters/Michigan Consumer Sentiment Index is an event to pay attention to. It is a survey of personal consumer confidence in economic activity. It shows a picture of whether or not consumers are willing to spend money. Generally speaking, a high reading anticipates positive for the USD, while a low reading is seen as negative.
GBP/USD risks falling deeper down
The Sterling was unable to maintain trade above 1.30 yesterday, but, as expected, managed to find support around the 1.2950 mark. Even though the weekly S1 and the Bollinger band keep providing immediate support, risks are still skewed to the downside. A number of US fundamentals later today could provide the impetus for another leg down, however, a rally is also possible. Technical indicators somewhat support this outlook, as they are no longer giving bearish signals in the daily timeframe. The 1.3050 is likely to be the ceiling in case of a bullish development, while the nearest resistance rests only around 1.3160.
Daily chart
The Cable continued to trade within the borders of the descending channel pattern yesterday, while a retest of either trend-line is expected today (if not a breakout). With the overall trend being bearish and the recent confirmation of the channel's upper border, a retest of the support line would be more probable.
Hourly chart
Still no consensus
There are slightly more bulls today, namely 64%, compared to 55% on Thursday. Meanwhile, the portion of orders to sell the Pound returned to its Wednesday's level of 64% (previously 36%).
Indecision appears to be widespread, as the same neutral sentiment is observed among the traders of other brokers. At OANDA, 60% of positions are long and 40% are short. The sentiment at Saxo Bank remains close to a perfect equilibrium, as the numbers of longs and shorts each take up 53% and 47%of the market, respectively.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.30 in three months
More than half of traders (53%) believe the British currency is to cost 1.30 or more dollars after a three-month period. The most popular price interval, however, was selected by 18% of the voters, namely the 1.24-1.26, while the second most popular choices imply that the Sterling is to cost either between 1.28 and 1.30 dollars or between 1.34 and 1.36 dollars in three months, both chosen by 14% of the surveyed. At the same time, the mean forecast for Nov 12 is 1.3162.