- 63% of pending orders in 100-pip range are to buy the pair
- 57% of traders are bullish on the Pound
- SWFX market sentiment is 56.60% bullish
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Upcoming Events: UK Services PMI, Official Bank Rate, Governor Carney Speech
The British Pound depreciated against the US Dollar, as the data revealed that the UK construction industry grew at the slowest pace in 11 months in July. After the report, the GDP/USD exchange rate fell by 0.05% to be seen trading at 1.3234. The Markit revealed that its PMI for Britain's construction sector dropped to 51.5 in July, below forecasts for a modest decline to 54.5 points. The report showed a decrease in commercial development and weaker house building, which reflected a slowdown in the property market. Moreover, post-election uncertainties and unclarity surrounding the country's economic outlook resulted in subdued demand for construction, while firms revealed less confidence about the future of the sector.
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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Official Bank Rate to be announced
Today is one of the most important days for the Pound this summer, as the Bank of England will announce its decision on the Official Bank Rate at 11:00 GMT. Afterwards, Governor Carney will deliver a speech, in which he will reveal the rationale of this decision and make some remarks about the further monetary policy of the central bank. However, a few earlier at 8:30 GMT the IHS Markit will publish information on the UK Services PMI, which usually causes quite high volatility in the markets. Both data releases will be covered by the Dukascopy Research Team.
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GBP/USD waits for BoE decision
In late Wednesday, the currency exchange rate made an attempt to break from a supposed head and shoulders pattern. However, the weekly R1 at 1.3200 once again proved to be a very meaningful barrier for the Pound. To certain extent, the rebound was also triggered by the approached 55-hour SMA that has additionally strengthened the above support level. From a technical perspective, the rest of the day the pair should spend in the surge towards the weekly R2 at 1.3264. However, at 14:00 GMT the Bank of England will announce the Official Bank Rate and, afterwards, Governor Carney will make remarks about this decision. Depending on the result, the Pound might surge or fall by 60-110 basis points, which means that it might be thrown from the currency ascending channel by traders' reaction.
Hourly chart
Yesterday the Pound continued to gradually climb towards the monthly R1 at 1.3357, which represents the first resistance barrier on its way. On the other hand, certain technical indicators continue to send signals that the pair is overbought. In any case, the result of today's trading session will fully depend on the BoE's decision about the Official Cash Rate. In other words, it might give a very strong impulse and accelerate the surge, or push the Sterling back to the 38.20% Fibonacci retracement level.Daily chart
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Bullish sentiment remains in force
Today the number of open long positions remained at the same level as yesterday and amounts to 56.60%. In the meantime, 57% of pending orders are to buy the Pound.
In contrast, traders at Saxo Bank are bearish on the pair, with 69% of traders holding short positions (+1%). Meanwhile, OANDA clients are similarly bearish on the pair, as 55% of all open positions are short (-1%).
Spreads (avg, pip) / Trading volume / Volatility