- All pending orders are equally divided between the buy and the sell ones
- 66% of traders are long the Pound
- Immediate resistance is at 1.2260
- The closest support is around 1.2201
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Upcoming Events: US PPI and Core PPI, UK CB Leading Index
The number of Americans filing for unemployment benefits rose more than expected last week, official figures showed on Thursday. The US Department of Labour reported initial jobless claims rose to 243,000 in the week ended March 3, up from the preceding week's record low of 223,000. Meanwhile, market analysts expected claims would climb to 239,000 claims during the reported week. Last week marked the 105th consecutive week of claims below the benchmark 300,000 level. Analysts state that the US economy is at or near full employment, with companies struggling to find qualified candidates for job openings. The strong performance of the labour market and rising inflation would probably force the Federal Reserve to raise rates at its next meeting on March 15. The Labour Department said there were no special factors influencing claims data. The four-week moving average of initial claims, considered a better measure of the labour market trends, advanced 2,250 to 236,500 last week.
Thursday's report also showed continuous jobless claims dropped 6,000 to 2.06 million in the week ending February 25, while their four-week moving average fell 5,250 to 2.07 million. The US Dollar traded little changed after the release, as investors awaited Friday's NFP report.
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US PPI and Core PPI to focus on
Ahead of Wednesday's FOMC Meeting Minutes traders can focus on the US PPI and Core PPI. The PPI measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. In the Core PPI, however, volatile products, such as food and energy, are excluded in order to capture a more accurate calculation.
Read More: Fundamental Analysis
GBP/USD falls over Brexit concerns
On Monday, the monthly S1 prevented British Pound from appreciating further, resulting in another spark of bearish momentum earlier today. Investors swiftly sold the Sterling amid latest news that Article 50 could be triggered by the end of the month. Nevertheless, the tough demand cluster circa 1.21, formed by the monthly S2, the weekly S1 and the lower Bollinger band, is expected to limit today's losses. Moreover, a close under 1.2150 implies that more weakness this week could follow, leading to a drop even under 1.20, rather than the retest of the trend-line around 1.24. Technical indicators are also in favour of the negative outcome today.
Daily chart
© Dukascopy Bank SA
As was anticipated, the 200-hour SMA played its part and kept the Cable at bay, limiting its upside potential yesterday. As a result, the GBP/USD pair slid again, but appears to have found support around 1.2140, a psychological demand level. A drop below this support would allow the exchange rate to reach the current 2017 low – 1.1987.Hourly chart
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Traders mostly bullish
Today 66% of traders are long the Pound (previously 69%), whereas all pending orders are equally divided between the buy and the sell ones.
A slightly more optimistic situation is observed elsewhere. For example, 69% of positions open at OANDA are currently long. This is more than the share of shorts (31%), barely sufficient for the sentiment to be called bullish. Meanwhile, sentiment at Saxo Bank is also bullish, with 65% of traders now being long and the other 35% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
© Dukascopy Bank SABy the end of the next three months traders expect the Cable to fall under the 1.22 major level, as 52% of survey participants believe so. While the current price is around 1.22, the average forecast for June 14 is 1.2357. The 1.18-1.20, the 1.20-1.22 and the 1.28-1.30 ranges are now the most popular price intervals, with all three having 15% of the votes, while on the second place is 1.16-1.18 price range, both with 13% of poll participants choosing it. Furthermore, the 1.30-1.32 interval was chosen by 11% of the voters.