- The portion of sell orders inched down from 60 to 54%
- 63% of traders have a positive outlook towards the Sterling
- Immediate resistance is at 1.2254
- The closest support is at 1.2072
- Upcoming events: BoE Credit Conditions Survey, MPC Member Forbes Speech, US Retail and Core Retail Sales, US PPI and Core PPI, BoE Gov Carney Speech, US Preliminary UoM Consumer Sentiment, Fed Chair Yellen Speech
The number of Americans filing for unemployment benefits remained at its 43-year low last week, official figures showed on Thursday. According to the US Department of Labor, initial jobless claims held at a seasonally adjusted 246,000 in the week ended October 8, while market analysts anticipated a slight increase to 252,000 during the reported period. Meanwhile, the preceding week's figure was revised down to 246,000 from the originally reported reading of 249,000. It was the 84th consecutive week of initial claims remaining below the 300,000 level, the longest streak since 1973. The four-moving average of claims, considered a better measure of labor market trends, declined 3,500 to 249,250 last week, the lowest level since November 1973. The data also showed the number of continuing claims decreased 16,000 to 2.05 million in the week ending October 1, the lowest level since June 2000, while its four-week moving average fell 25,750 to 2.07 million.
In a separate report, the Department of Labor said import prices rose 0.1% month-over-month in September, following August's 0.2% drop and meeting analysts' expectations. On an annual basis, import prices declined 1.1% in the same month, compared to the previous month's 2.2% fall.
US data to drive the Cable
On Friday important data from the US side are due, namely the Retail Sales and the PPI. The Retail Sales are released by the US Census Bureau and measure the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. The Core Retail Sales, however, exclude the automobile sector in order to provide a more precise reading. The US PPI is released by the Bureau of Labor Statistics and the Department of Labor, measuring the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Another possible event to have some impact will be the Reuters/Michigan Consumer Sentiment Index. It is a survey of personal consumer confidence in economic activity. It shows a picture of whether or not consumers are willing to spend money.
GBP/USD sets eye on 1.21
Even though the British Pound managed to outperform the US Dollar on Thursday, the monthly S3 once again prevented the pair from edging higher. Consequently, the GBP/USD pair is now expected to make a U-turn and fall back at least towards the 1.21 level. The Bollinger band around 1.2072 represents immediate support, but the demand area around 1.1950 is much stronger, represented by last week's low and the weekly S1. On the other hand, technical indicators are giving mixed signals, creating a possibility for another leg up, with the main drivers being the US fundamentals today.
Daily chart
On the hourly chart the situation confirms the outlook of the situation on the daily chart. The pair edged closer to the descending channel's resistance line earlier today, which should technically cause the Cable to move lower, with the 1.19 level being the bottom floor.
Hourly chart
Traders mostly bullish
There are 63% of traders with a positive outlook towards the Sterling today, compared to 65% on Thursday. At the same time, the portion of sell orders inched down from 60 to 54%.
A similar situation is observed elsewhere. For example, 59% of positions open at OANDA are currently long. This is more than the share of shorts (41%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 65% of traders being long and 35% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect no major changes
By the end of the next three months traders expect the Cable to be higher than the level where it is now. While the current price is around 1.23, the average forecast for January 14 is 1.2825. Furthermore, the 1.28-1.30 interval is now the most popular one, having 13% of the votes. On the second place in terms of the votes is the 1.32-1.34 (12%) interval, followed by the 1.22-1.24 and the 1.30-1.32 price ranges with 9% of the votes each. Moreover, 59% all survey participants believe the Cable is to fall under 1.30.