- 58.60% of pending orders in 100-pip range are to buy the pair
- 53% of traders are bullish on the Pound
- SWFX market sentiment is 56.30% bullish
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Upcoming Events: UK Construction PMI, US ADP Non-Farm Employment Change
GBP gained solid ground on the back of reports showing Britain's manufacturing activity expanding more than anticipated in July. After the release, the Pound appreciated against the US Dollar by 0.05% to hit the 1.3215 mark.
According to Markit, the UK Manufacturing PMI rose to 55.1 points in the reported month, surpassing expectations for a 54.3 reading. Manufacturing expanded for the first time in three months, being mainly driven by strong gains in new orders that were encouraged by higher exports. Furthermore, the overall expansion in the industry resulted in the strongest increase in job creation within the manufacturing sector in recent years. However, the data is still not likely to have a big impact on the BoE's policy decision due on Thursday.
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US ADP Non-Farm Employment Change in focus
In the morning, at 8:30 GMT, the IHS Markit will release information on the UK Construction PMI, which, however, does not usually cause any notable volatility in the markets. A few hours later, at 12:15 GMT, the ADM will provide an outlook at change in the number of employed Americans during the previous month, excluding state emloyees and farming industry.
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GBP/USD finds support at weekly R1
Even though both British and the US Manufacturing PMIs matched with experts' forecasts, the currency exchange rate did not manage to reach the weekly R2 located at the 1.3264 level. On the other hand, a strong support barrier set up by the weekly R1 at 1.3200 also did not let the pair to slip to the bottom. Thus, during the whole previous trading day the currency rate was moving along the above pivot point, basically, forming a head and shoulders pattern. From a technical perspective, the rate should leave the formation downwards and try to target the 1.3128 level. In order to do that, it would have to bypass the rising 55- and 100-hour SMAs. For this reason, the successful slip downstairs is doubtful. Most probably, the pair will continue attempts to climb upstairs.
Hourly chart
The first hours of Wednesday trading session showed that the Pound has secured its exit from a rising wedge pattern. For this reason, the ultimate goal for the next two weeks remains the same, i.e. the monthly R1 at 1.3357. This scenario is supported by the fact that the above pivot point represents the first resistance level that the currency pair might encounter on its way to the top.Daily chart
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Bullish sentiment remains in force
Today the number of open long positions has decreased again from 58% to 56%. Yet, 53% of pending orders are to buy the Pound.
In contrast, traders at Saxo Bank are bearish on the pair, with 68% of traders holding short positions (+3%). Meanwhile, OANDA clients are similarly bearish on the pair, as 56.90% of all open positions are short.
Spreads (avg, pip) / Trading volume / Volatility