- 56% of pending orders in a 100-pip range are to sell the pair
- 63% of traders are bullish on the Pound
- Notable support is located at the 1.2851 mark
- Upcoming Events: Day of silence
Beginning of the new week the British Pound started in a descending triangle pattern against the US Dollar. Today the pair is expected to make another decisive attempt to break out from the pattern.
The Sterling gained 14 base points against the US Dollar, as the UK Retail Sales report showed slightly better-than-expected data. The GBP/USD currency pair rose 0.11% to be seen trading near the 1.2901 mark just for a while and then retreated to the previous level. However, on Friday morning the Pound was strong enough to repeat the post-release gains.
The Office for National Statistics revealed that Britain's retail sales surged 0.3% month-over-month in July, above expectations for a 0.2% rise, though the figure was weaker than a 0.6% registered in June. Higher food sales managed to offset a decrease in spending on other goods. Moreover, the UK retail sales are expected to show modest expansion this year, if real wage growth keeps falling behind inflation.
No interest for swing traders
This week's Monday traditionally lacks any significant macroeconomic data releases from the both sides of the Atlantic. However, those who carefully follow development of the UK economy might take a look at the Public Sector Net Borrowing, which will be announced tomorrow at 8:30 GMT.
GBP/USD bounces off long term support
The British Pound is continuing to lose value against the US Dollar in a four day long descending triangle pattern. The figure formed in result of traders' reaction on announcement of the UK CPI last Tuesday.
Most probably, the Sterling is going to fail to break to the top, as the northern path is secured by a combination of the 55- and 100-hour SMAs plus the updated weekly PP, which is located slightly above the pattern at 1.2910.
This assumption seems valid not only from the trade pattern theory, but is also supported by a summary of multiple technical indicators, which send strong sell signals for the 5H and 1D timeframes.
Hourly chart
By examining the daily chart, it can be noted that despite the additional strengthening of the lower support line by the 100-day SMA, the currency rate managed to break from the pattern.
At the moment, it is not entirely clear, in which direction is going to continue to move. However, the gradual slip towards the 23.6 Fibonacci retracement level seems a more viable scenario.
On the other hand, a minor overstep beyond the pattern's boundary might represent a small correction, after which it will resume the surge.
Daily chart
Sentiment remains neutral
The bullish sentiment has increased slightly on Monday, with 67% of open positions being long. Meanwhile, the dominant number of pending orders remains bearish, currently standing at 63% to sell the Pound.
It can be observed that OANDA traders are almost perfectly neutral, as 52.30% of open positions are short. Meanwhile, traders at Saxo Bank are bearish on the pair, with 61% of traders holding short positions.