- The portion of sell orders inched up from 54 to 55%
- 60% of traders are long the Pound
- Immediate resistance is at 1.2532
- The closest support is at 1.2486
- Upcoming Events: US Employment Cost Index, Chicago PMI, US CB Consumer Confidence
Consumer spending in the United Sates advanced more than expected last month as households boosted purchases of motor vehicles and services amid increasing wages. On Monday, the Commerce Department reported consumer spending rose 0.5% in December, following the preceding month's 0.2% rise and surpassing a 0.4% increase forecast. The stronger than expected figure pointed to solid domestic demand that is expected to boost economic growth in early 2017. Data showed purchases of manufactured durable goods climbed 1.4% last month, while consumer spending on services jumped 0.4%.
Meanwhile, personal income increased 0.3% month-over-month in December after rising 0.1% in the prior month. However, economists expected household income to climb 0.4%. Salaries and wages grew 0.4% in December after dropping 0.1% in November. For all of 2016, income climbed 3.5% after increasing 4.4% in 2015. Separately, the Commerce Department said the PCE Price Index advanced 0.2% in December, following November's 0.1% increase. During the twelve-month period ending December, the Index rose 1.6%, the largest increase since September 2014, up from the previous month's 1.4% rise. Excluding volatile items, the Core PCE Index grew 0.1% after being unchanged in November, in line with analysts' expectations.
Relatively uneventful Tuesday
Tuesday is a relatively quiet day in terms of fundamental data, but some data could still have an impact on the Cable, for example the Chicago PMI or the US Consumer Confidence. The Chicago PMI captures business conditions across Illinois, Indiana and Michigan states. This index is an indicator of business trends and it is interrelated with the ISM Manufacturing Index. It is widely used to indicate the overall economic condition in the US. Meanwhile, the Consumer Confidence captures the level of confidence that individuals have in economic activity. A high level of consumer confidence stimulates economic expansion, while a low level drives to economic downturn.
GBP/USD to climb back above 1.25
The British currency sustained further losses against the US Dollar on Monday, with the immediate demand area around 1.2515 failing to limit the losses. Although the Cable slipped back under 1.25 yesterday, another tough support area is now likely to keep the pair afloat. The support cluster is formed by the monthly PP, the weekly S1, the 20 and the 55-day SMAs, all located around the 1.24 major level. However, the 100-day SMA could also play its part and still trigger a rebound. Technical indicators also suggest the Sterling could edge higher today, but with the 1.26 mark remaining intact, as there is no impetus present for a surge that far up.
Daily chart
On Monday the GBP/USD currency pair continued to slide down, finding support at the 200-hour SMA. The given level could provide the Cable with sufficient impetus to recover, but there is a lot of uncertainty present in the markets nowadays, with the pairs mainly driven by external factors. As a result, downside risks for the Sterling also remain.
Hourly chart
Traders mostly bullish
Today 60% of traders are long the Pound (previously 62%). At the same time, the portion of sell orders inched up from 54 to 55%.
A slightly less optimistic situation is observed elsewhere. For example, 55% of positions open at OANDA are currently long. This is more than the share of shorts (45%), barely sufficient for the sentiment to be called bullish. However, sentiment at Saxo Bank strengthened once again, with 59% of traders being long and 41% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
By the end of the next three months traders expect the Cable to fall under the 1.22 major level, as 50% of survey participants believe so. While the current price is around 1.25, the average forecast for April 30 is 1.2292. However, the 1.14-1.16 interval is now the most popular one, having 18% of the votes, while on the second place is the 1.20-1.22 price range, with 14% of poll participants choosing it. Furthermore, the 1.30-1.32 interval was chosen by 12% of the voters.