- 58% of pending orders in the 100-pip range are to BUY
- 51% of traders is to sell the Pound (-1%)
- Rate faces resistance support circa 1.3490
- Upcoming events: UK Construction PMI, US Factory Orders m/m
The Sterling depreciated initially against the Greenback, fuelled by stronger-than-anticipated Britain's manufacturing data. The GBP/USD exchange rate fell 15 base points or 0.11% to be seen trading lower, though bulls attempted to put the pair back above the 1.3510 mark.
The UK factories enjoyed the strongest monthly growth since 2013, indicating that manufacturing would fuel the country's sluggish economic expansion entering next year. The Markit/CIPS survey showed that Britain's Manufacturing PMI rose to 58.2 in November, following an upwardly revised 56.6 in the prior month. A strong manufacturing sector could remain a bright spot in 2018, while overall economic slowdown is expected to deepen as Brexit approaches in March 2019.
UK Construction PMI
This trading session includes only two sets of fundamentals that might affect the GBP/USD currency pair. The day will start with the British Construction PMI for November to be released at 0930GMT.
In addition, the US Census Bureau will publish monthly Factory Orders for October at 1500GMT.
GBP/USD reaches two month maximum at 1.3550
As it appears from hourly chart, the 1.3550 mark signified the two month maximum that the cable could not surpass. In result of a rebound, a new junior descending channel has been formed.
The pattern is expected to stay in force at least until the rate will reach support set up by the 100-hour SMA and the weekly PP near 1.3420. If this barrier becomes broken, a more mature support zone should be formed by the 200-hour SMA and the monthly PP at 1.3371.
However, there is an assumption about formation of two other medium ascending channels whose lower boundaries might intersect with the 23.6% Fibonacci retracement level located at 11.3256 and the monthly S1 at 1.3195. In that case, bears are likely to take the lead for the upcoming two-three weeks.
Hourly chart
The passed US tax bill resulted in the pair opening 28 pips below its closing price on Friday. However, it had already managed to demonstrate high volatility early in this session, thus failing to show a dominant direction.
The nearest support is provided by the weekly PP at 1.3416; the monthly PP is likewise located nearby at 1.3372. On the other hand, resistance is set by the distant weekly R1 at 1.3610. It is possible that the pair tries to make a retracement from the upper boundary of the descending channel which was breached last Wednesday.
Market sentiment largely bearish
The SWFX market sentiment remains bearish, with 51% of open positions being short this Monday (-1%). Meanwhile, 60% of pending orders are to buy the Pound (+1%).
The market sentiment of OANDA traders is likewise bearish, as 56% of open positions are short (+1%). Saxo Bank clients share the same sentiment with 67% short positions (+1%).