- The share of purchase orders inched up from 53 to 55%
- 50% of all open positions are long
- Immediate resistance is around 1.3052
- The closest support rests circa 1.3020
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Upcoming events: US Unemployment Claims; Philly Fed Manufacturing Index
Pay growth in the United Kingdom dropped below inflation for the first time in more than two years, official figures revealed on Wednesday. The Office for National Statistics reported that wage growth, excluding bonuses, advanced 2.1% on an annual basis in the March quarter, the weakest gain since the three-month period to July 2016. Thus, pay growth adjusted for inflation dropped 0.2%, the first decline since the Q3 of 2014. Including bonuses, average hourly earnings increased 2.4% in the Q1 of 2017, after rising 2.3% in the three-month period to February. Nevertheless, the unemployment rate fell to 4.6%, the lowest in more than forty years, suggesting that the British labour market remained strong despite weak wage growth.
Meanwhile, market analysts expected the jobless rate to remain unchanged at 4.5% during the reported month. However, the claimant count change rose a seasonally adjusted 19.4K in April, following an upwardly revised climb of 33.5K in the preceding month. If pay growth remains below inflation growth consumer spending will likely stop supporting economic growth in Britain.
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Minor US Data
Attention turns to Thursday's fundamentals. Events are from the US side, namely the Philadelphia Fed Manufacturing Index. It is a spread index of manufacturing conditions within the Federal Reserve Bank of Philadelphia. Served as an indicator of manufacturing sector trends, it is interrelated with the ISM Manufacturing Index and the Index of Industrial Production. It is also used as a forecast of the ISM Index. The other event is the Initial Jobless Claims, which are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labour market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy.
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GBP/USD: U-turn in sight
For the third consecutive day this week the British Pound was able to outperform the US Dollar yesterday, approaching dangerously close to the 1.30 mark. The goal remains unchanged, as the Sterling is required to pierce the consolidation trend's upper border in order to continue posting gains. As a result, risks of the pair shifting polarity persist, which would trigger another spark of bearish momentum and would eventually lead to a drop under 1.29, with the consolidation trend's lower border then in focus. Technical indicators keep giving mixed signals, unable to confirm this outlook.
Daily chart
On the hourly chart traders can observer a magnificent sight. There is one candle, where the total jump is above 90 base points, which is actually a larger move than the previous three trading sessions combined. However, the move was consistent with the ascending channel pattern, which is drawn on that size chart.Hourly chart
Read More: Technical Analysis
Traders remain neutral
Once again market sentiment reached a perfect equilibrium, but the portion of orders to buy the Pound inched slightly higher in the last 24 hours, namely from 53 to 55%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 60% of all open positions are short and the remaining 40% are long. Meanwhile, sentiment at Saxo Bank worsened again, with 58% of traders now being short and the other 42% - 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 64% of survey participants believe so. While the current price is around 1.29, the average forecast for August 18 is 1.3085. The 1.32-1.34 and 1.34-1.36 ranges are now the most popular price intervals, having 17% of the votes.