- 62% of pending orders in a 100-pip range are to buy the pair
- 67% of traders are bullish on the Pound
- Significant resistance lies circa 1.2950
- Upcoming Events: MPC Member Saunders speaks, US Unemployment claims, US Core PCE Price Index m/m, US Personal Spending m/m, Chicago PMI, US Pending Home Sales m/m
As it expected, the Sterling slightly appreciated against the Greenback after announcement of the UK Second Estimate GDP. Unfortunately, afterwards the Pound made two failed attempts to break above the northern boundary of a senior descending channel. Such outcome confirms that the pair should continue to move in the downward direction. However, the speech delivered by Janet Yellen later this day might turn around the rate and dissolve the current formation.
The combination of the UK economic reports contributed to the initial fall of the GBP/USD, though losses were offset immediately. The Sterling weakened against the US Dollar by 20 base points or 0.16% to rebound from the 1.2785 mark and continue moving upward. The Office for National Statistics reported that the preliminary estimate for the Britain's economic growth in the June quarter was confirmed at 0.3% in line with the previous release. The GDP figures revealed that the UK economy expanded at the slowest pace amongst the G7 this year, as the Brexit uncertainty caused dampening business investment, which missed expectations being flat in the reported period. Meanwhile, the weaker Pound hurt consumer spending more than supported exporters.
US Unemployment Claims
This trading session will start with a speech by External BOE MPC Member Michael Saunders at 0725GMT. Meanwhile, the first data release is the weekly US Unemployment Claims, US Core PCE Price Index and US Personal Spending at 1230GMT. In addition, Chicago Business Barometer is to be published at 1345GMT and US monthly Pending Home Sales – at 1400GMT.
GBP/USD trades in limbo
In line with expectations, yesterday the exchange rate continued to move towards the 100-hour SMA amid a pressure from a combination of the weekly R1 and the monthly S1 as well as from release of the US macroeconomic data. At the moment, the pair is remaining in a limbo between these support and resistance levels. Most probably, the Pound will continue to try to sneak to the top, using a silent day for its counterpart. On the other hand, the further fall towards the 1.28 mark seems a more reasonable path, as it contains a lot of free space until the 200-hour SMA near 1.2872. Nevertheless, a summary of technical indicators vote in favour of the surge, sending a strong buy signal.
Hourly chart
A resistance cluster formed by the monthly S1, weekly R1 and the 55-day SMA proved to strong enough to halt any further efforts to push higher on Wednesday. As a result, bears have managed to take the upper hand in this session and test the 100-day SMA at 1.2910. The next support – the weekly PP at 1.2858 – is a relatively distant target, demonstrating that a breakout of the 100-day SMA might set the pair for a plunge.
Daily chart
Market sentiment slightly bearish
The bullish GBP/USD sentiment dominates the market, as 67% of open positions are long (unchanged from Wednesday). Meanwhile, pending orders are almost at equilibrium, with 52% of pending orders being long.
Open positions of OANDA traders are likewise at equilibrium, as the number of long and short positions is 50%. Meanwhile, traders at Saxo Bank are still bearish on the pair with 62% long positions (+1%).