- The share of sell orders slid from 54 to 51%
- 63% of all open positions remain long
- The weekly S1 provides immediate support at 1.4125
- The weekly PP at 1.4259 is the closest resistance
- 69% of traders reckon GBP/USD will be at 1.48 or lower in three months
- Upcoming events: UK Manufacturing PMI, UK Net Lending to Individuals, UK Mortgage Approvals, US Core PCE Price Index, US Personal Spending and Income, US ISM Manufacturing PMI, US Construction Spending, FOMC Member Fischer Speech
The British currency suffered losses against most major peers on Friday and over the weekend. The Pound mostly dropped against commodity currencies, edging 1.21% lower against the Loonie, 0.87% versus the Kiwi and 0.83% versus the Aussie. The Cable, however, edged 0.82% lower against the Sterling, while the Sterling appreciated 1.12% against the Japanese Yen. The Pound, however, remained relatively unchanged against the Euro and the Swissie, adding 0.16% and 0.10%, respectively.
The world's number one economy slowed sharply in the fourth quarter, stoking concerns about its momentum in 2016. The US gross domestic product increased at an annualized 0.7%, according to the Commerce Department, as lower oil prices continued to hurt investment by energy companies and unseasonably mild weather dent consumer spending on utilities and apparel. The US growth pace followed a 2% rate in the third quarter. Overall, the US economy grew 2.4% in 2015 after a similar growth pace in 2014. The weak growth could stoke new concerns about the nation's ability to withstand a series of major headwinds, including a slowdown in China and a stronger US Dollar that has cut profits for American manufacturers. Nevertheless, the GDP figure for the fourth quarter is only a preliminary gauge and will be a subject to revision over the next two months.
In the final three months of 2015, businesses accumulated $68.6 billion worth of inventory, down from $85.5 billion in the September quarter. The small inventory build subtracted 0.45 percentage point from the first estimate of fourth-quarter GDP growth. The US Dollar, which has appreciated 11% versus its counterparts since last January, remained a drag on exports, resulting in a trade gap that subtracted 0.47 percentage point from GDP growth in the reported period.
Manufacturing data is today's main driver
Manufacturing data is due today concerning both the US and the UK economies. The Manufacturing Purchasing Managers Index (PMI) is released by both the Chartered Institute of Purchasing & Supply and the Markit Economics and captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in UK. The US Manufacturing PMI is rather similar, but unlikely the UK's figures, it is expected to remain unchanged, rather than worsen today.
GBP/USD to fall under 1.42
The British currency experienced another slump last Friday, reaching a daily low of 1.4150, but stabilising at 1.4246. Even though the GBP/USD was seen mostly consolidating during the previous week, this trend has fallen under the risk of getting broken today. Technical indicators retain bearish signals, while the supply at 1.4269, namely the weekly PP, is rather tough. Furthermore, an even stronger cluster is located just under the 1.44 major level. The closest support, however, is located at 1.4125 and represented by the weekly S1.
Daily chart
The Sterling broke out of the rising wedge on Friday, dropping to a one-week low. Even though the pair is undergoing a correction, the 200-hour SMA around 1.4260 could trigger another sell-off. However, the rally might also extend towards the major level of 1.43.
Hourly chart
Bullish sentiment intact
There was no change in the bullish sentiment, as 63% of all open positions remain long. The share of sell orders slid from 54 to 51%.
Most of the OANDA clients are also bullish - 66% of them are currently holding long positions. At the same time, the bulls at SAXO Bank regained the majority, and now they take up 53% of the market (49% previously).
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.50 in three months
The majority of traders (69%) believe the British currency is to cost 1.48 or less dollars after a three-month period. The most popular price interval was selected by slightly less than a quarter (26%) of the voters, namely the 1.42-1.44 one, while the second most popular choice implies the Pound is to cost between 1.38 and 1.40 dollars in three months, chosen by 13% of the surveyed. At the same time, the mean forecast for May 01 is 1.4518.