- The share of purchase orders inched up from 51 to 55%
- 58% of all open positions are long
- Immediate resistance is around 1.2530
- The closest support is around 1.2420
-
Upcoming Events: US Initial Jobless Claims, UK Manufacturing Production, UK Goods Trade Balance, UK Construction Output, UK Industrial Production, UK NIESR GDP Estimate, US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate
The PMI for the British services sector surprised many experts, who did not expect any significant change in March. According to IHS Markit, the PMI soared to 55.0 while analysts forecasted only a minor increase to 53.5. Thus, the PMI remained above the no-change value for the eighth consecutive month. This result showed that activity in the British services sector rebounded from five-month lows registered in the previous month. In March, business activity and new work creation grew at the fastest pace this year, so far. According to Markit, it was attributable to greater customers' demand and favourable economic conditions, such as the weak Pound. In fact, especially high demand on British services was recorded in the United States. The overall sentiment about business prospects among the surveyed companies remained positive. Thus, half of the respondents believed that their business activity would improve in the year-ahead. However, some companies continued to complain about the Brexit-related anxiety, which precluded investment inflows.
Moreover, average prices charged by service providers increased at the highest rate since 2008, as input costs surged markedly in the recent months. In addition, experts also recorded the weakest job creation since August 2016.
Watch More: Dukascopy TV
A calm before the storm
Thursday is a calm before the storm, as only the US Initial Jobless Claims are due before Friday's NFP data. The Jobless Claims are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market which influences the strength and direction of the US economy.
Read More: Fundamental Analysis
GBP/USD attempts to retake 1.25
Even though the ADP data surprised to the upside yesterday, the FOMC Minutes weighed on the US Dollar, allowing the Pound to erase most of Tuesday's losses. Another positive development is expected today, with the Cable reclaiming the 1.25 major level. However, there are doubts the exchange rate will be able to stabilise above the 1.2516 mark, namely the weekly PP, as there are no solid market drivers present today. On the other hand, the Buck has a tendency of strengthening the day ahead of the NFP data; therefore, a slide back towards the support cluster circa 1.2425 is not out of the question.
Daily chart
© Dukascopy Bank SA
For the second week in a row the Cable has been sliding down, with the latest decline triggered by the retest of the down-trend at 1.25. This development could end with the triangle pattern's breach to the downside, with Friday's NFP data acting as a catalyst.- Hourly chart
© Dukascopy Bank SARead More: Technical Analysis
Traders mostly bullish
Traders' sentiment remains bullish, now with 58% of all open positions being long (previously 57%). At the same time, the share of purchase orders inched up from 51 to 55%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA is now neutral, but with bears outnumbering the bulls, namely 48% of all open positions are long and the remaining 52% are short. Meanwhile, sentiment at Saxo Bank weakened over the day, with 56% of traders now being long and the other 44% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.22 major level, as 54% of survey participants believe so. While the current price is around 1.25, the average forecast for July 06 is 1.2353. The 1.30-1.32 range is now the most popular price interval, having 15% of the votes, while on the second place is the 1.18-1.20 price range, with 13% of poll participants choosing it. Furthermore, the 1.14-1.16, the 1.20-1.22, the 1.24-1.26 and the 1.26-1.28 intervals were each selected by 9% of voters.