- 60% of all pending orders are to sell the Sterling
- 63% of traders hold long positions
- Immediate resistance is at 1.2460
- The closest support is around 1.24
- Upcoming events: UK Halifax HPI, US Consumer Credit, UK Manufacturing and Industrial Productions, UK NIESR GDP Estimate, US JOLTS Job Openings, US Presidential Election
US private companies added fewer than expected jobs last month, whereas the unemployment rate improved slightly, the October Non-Farm Payrolls report showed on Friday. According to the Bureau of Labor Statistics, the US economy created 161,000 new jobs in the reported period, while market analysts expected non-farm payrolls to increase by 174,000. Meanwhile, the September gain was revised up to 191,000 from the originally reported 156,000. However, the odds of a December rate remained quite high, despite today's disappointing jobs report. Furthermore, average hourly earnings advanced 2.8% and 0.4% on annual and monthly basis, respectively, while average weekly remained unchanged at 34.4 last month. The unemployment rate declined unexpectedly to 4.9% in October, following the preceding month's 5.0%. After the release, the US Dollar declined slightly against other major currencies, trading at 1.1111 against the Euro and 103.10 against the Japanese Yen.
Separately, the Bureau of Economic Analysis said on Friday that the US trade deficit narrowed to $36.44 billion in the same month from September's gap of $40.46 billion, which was revised up from the originally reported $40.70 billion deficit. Economists expected the US trade gap to decrease to $37.80 billion during October.
Relatively quiet Monday
There are only two fundamental economic data releases that could have some impact on the GBP/USD pair today, namely the UK Halifax HPI and the US Consumer Credit Change. The Halifax HPI is the UK's longest running monthly house price series, which presents house prices and property price movements on a like-for-like basis. The housing prices are considered as a key indicator for inflationary pressures. As for Consumer Credit Change, it is an amount of money that individuals borrowed. It shows if consumers can afford large expenses, which can fuel economic growth. However, a high figure may also indicate that the economy is overheating, as consumers borrow in order to live beyond their means.
GBP/USD trades in murky waters
The British Pound prolonged its rally against the US Dollar on Friday, establishing a new four-week high of 1.2557. Having opened with a relatively small bearish gap today, the Cable slipped back below the 1.25 major level. This suggests that another surge could be far-fetched, even though only the Bollinger band is providing immediate resistance. On the other hand, a strong bearish development is also unlikely, as the weekly and the monthly PPs form a substantial demand area around 1.24. Furthermore, there are no fundamental events that could have a significant impact on the GBP/USD pair today, apart from the US elections. Technical indicators are also giving mixed signals today.
Daily chart
The Cable reached its short-term peak on Friday, having touched the 1.2557 mark. The pair now appears to have made a U-turn, slowly moving lower, with the closest level to limit the losses the losses being the 200-hour SMA around 1.2280.
Hourly chart
Traders mostly bullish
There are 63% of traders holding long positions today (previously 60%), whereas 60% of all pending orders are to sell the Sterling.
A similar situation is observed elsewhere. For example, 60% of positions open at OANDA are currently long. This is more than the share of shorts (40%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 56% of traders being long and 44% 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 1.24, the average forecast for November 07 is 1.2131. Furthermore, the 1.18-1.20 interval is now the most popular one, having 21% of the votes. On the second place in terms of the votes are the 1.16-1.18 (14%) and the 1.20-1.22 (14%) intervals, followed also by the 1.14-1.16 with only 10% of the votes. Moreover, 75% all survey participants believe the Cable is to fall under 1.26.