- 49% of all pending orders are to acquire the Pound
- 57% of traders hold short positions
- Immediate resistance is around 1.2935
- The closest support is at 1.2898
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Upcoming events: US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate, Fed Chair Yellen's speech
GBP/USD sustained its tendency of lacking momentum to move in any direction and opened flat for the fifth consecutive time, suggesting that the pair might take this path until it meets the bottom trend-line of the senior broadening wedge. Once again it is likely to target the support level below at 1.2898 and has a good chance of slipping underneath as none of the previous attempts at it have resulted in a confirmation of the area. We will therefore see 1.2829 as a more prominent threat on the downside.
British services activity rose unexpectedly last month, suggesting that the economy recovered from a sluggish start. Marki/CIPS reported on Thursday that its Purchasing Managers' Index for the UK services sector came in at 55.8 in April, the second highest since mid-2015, following the preceding month's 55.0 and surpassing analysts' expectations for a decline to 54.6. The PMI surveys released this week are set to provide significant support to the current PM Theresa May and the Conservative Party ahead of the June 8 National Election. Thursday's data also showed that prices charged by service providers rose at the fastest pace since July 2008 amid the sharp fall in the value of the Pound after the Brexit vote. Moreover, more companies lowered their outlook for economic growth and business activity in the sector. Markit reported that according to its PMI surveys the British economy was expanding at a 0.6% pace in the Q2. Furthermore, Markit said that the economy would lose its positive momentum soon, as rising prices continued putting significant pressure on households.
The Conference Board CCI dropped more than experts estimated. In April, it lost 3.8% and reached 120.3, thus, marking the first decline since January. The fall was mainly attributable to the less optimistic view of business conditions and the labour market in the upcoming six months. The Department of Commerce reported that orders for durable goods in March soared only 0.7%, following February's increase of 1.8%. Excluding transportation items, orders for core durable goods plunged 0.2%, while analysts anticipated 0.4% growth. The US economy expanded at its weakest pace since the Q1 of 2014 in the three-month period to March, as consumer spending barely rose; however, a rise in business investment and improving pay growth held out hopes that the economy would regain momentum in the upcoming quarters. The Department of Commerce reported on Friday that the economy grew at a 0.7% annual pace in the Q1, following the preceding quarter's 2.1% and falling behind expectations for a 1.3% climb.
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On the agenda: US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate, Fed Chair Yellen's speech
In contrast to Thursday, the economic calendar is quite packed on Friday, and markets are getting ready for a bunch of US fata later today. Labour data, such as average hourly earnings, non-farm employment change as well as the unemployment rate are to be released at 13:30 GMT and given the likelihood that at least one of them might post a surprise, some volatility might spill into the GBP USD market as well. Yellen's speech at 18:30 GMT could stir up currency markets in case any hints on further policy and its interaction with political realities are dropped.
Read More: Fundamental Analysis
GBP/USD opens lacking direction
GBP/USD did not manage to make a movement in any direction over the last few days and opened on a similar note – non-volatile and lacking momentum. While immediate support rests at 1.2898, it is unlikely to cut downside potential as it has already been proved on previous tests. In case the pair does start moving south ultimately towards the bottom trend-line of the senior broadening wedge around 1.2760, the first target will be 1.2829. If, however, the pair starts to launch a third attack at the upper trend-line of the pattern, we will start questioning its strength and eye 1.3022.
Daily chart
It appears that GBP/USD has established a channel-like formation on the hourly chart, meaning that the cross might be on the expected way towards the bottom of the senior wedge pattern. In case it bounces off 1.2935 to the downside, the channel will have gained another confirmation which would suggest that risks are indeed skewed below. A break above the channel line would, however, open up 1.2939 for tests and might in the end lead to a very bullish outlook.Hourly chart
Read More: Technical Analysis
Traders still almost neutral
There are 51% of traders holding short positions today (previously 50%), whereas 57% of all pending orders are to acquire the Pound.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 64% of all open positions are short and the remaining 36% are long. Meanwhile, sentiment at Saxo Bank worsened again over the day, with 59% of traders now being short and the other 41% - long on the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.30 major level, as 54% of survey participants believe so. While the current price is around 1.29, the average forecast for August 05 is 1.2937. The 1.30-1.32 range is now the most popular price interval, having 16% of the votes, second comes 1.34-1.36, but the third place is tied by 1.28-1.30 and 1.32-1.34, with 13% of poll participants choosing either option.