- The portion of sell orders inched up from 61 to 64%
- 66% of all open positions are long
- Immediate resistance is at 1.2544
- The closest support is around 1.2390
- Upcoming events: UK Retail Sales, US Building Permits, US CPI and Core CPI, Philadelphia Fed Manufacturing Index, US Initial Jobless Claims, US Housing Starts, Fed Chair Yellen's Testimony
US industrial production remained unchanged unexpectedly last month, amid the weak heating demand. According to the Federal Reserve, the country's industrial output was flat on a seasonally adjusted basis in October, following the preceding month's downwardly revised fall of 0.2%. However, market analysts anticipated a slight increase of 0.2% in the reported month. Utilities production declined 2.6% last month, after dropping 3.0% in September. The Fed said milder weather than normal reduced the demand for heating during October, offsetting gains of 0.2% and 2.1% in the manufacturing and mining categories, respectively. Data also showed that capacity utilization fell 0.1% to 75.3%.
Separately, the US Department of Labor said its Producer Price Index came in at 0.0% in October, whereas economists expected the Index to advance 0.3% as in the prior month. Nevertheless, on an annual basis, the PPI rose 0.8%, the largest increase since December 2014, compared to September's gain of 0.7%. In the meantime, the Energy Information Administration reported on Wednesday that US crude oil inventories increased to a seasonally adjusted rate of 5.3 million barrels in the week ended November 11, following the previous week's rise of 2.4 million barrels.
Another day of important US fundamentals
Thursday is rather rich in terms of fundamental data that could affect GBP/USD's performance. From the UK side there are the Retail Sales, which 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 fuel in order to capture a more accurate calculation. From the US side the most important figure will be the CPI. The CPI is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. In Core CPI the volatile products, such as food and energy, are excluded in order to capture and accurate calculation. Another relevant event will be the Building Permits, which show the number of permits for new construction projects. It implies the movement of corporate investments (US economic development). It tends to cause some volatility to the USD. Going further is the Philadelphia Fed Manufacturing Survey, which is a spread index of manufacturing conditions within the Federal Reserve Bank of Philadelphia. This survey, served as an indicator of manufacturing sector trends, is interrelated with the ISM Manufacturing Index and the Index of Industrial Production. It is also used as a forecast of the ISM Index.
GBP/USD still stuck between 1.24 and 1.2550
The Sterling remained relatively unchanged against the US Dollar yesterday, having experienced a small eight-pip decline. The support area around 1.2390, represented by the weekly S1, the monthly PP and the 20-day SMA, remains strong, thus, a significant drop today is doubtful. Meanwhile, technical indicators are in favour of the bullish outcome, with the weekly pivot point at 1.2544 retaining its role of the immediate resistance. However, the exchange rate is unlikely to reach the immediate supply level, as the 1.25 psychological mark should also be considered as a potential resistance, which kept the GBP/USD pair at bay during the previous two sessions.
Daily chart
The pair continued to trade relatively flat, unable to maintain its position above the 200-hour SMA on the hourly chart. This is the only obstacle on the Cable's path, which could prevent the outlook of the daily chart from happening, resulting in more bearish movement.
Hourly chart
Traders mostly bullish
Bulls keep gaining numbers, as 66% of all open positions are long (previously 64%). The portion of sell orders inched up from 61 to 64%.
A similar situation is observed elsewhere. For example, 62% of positions open at OANDA are currently long. This is more than the share of shorts (38%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 64% of traders being long and 36% 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 17 is 1.2266. Furthermore, the 1.18-1.20 interval is now the most popular one, having 17% of the votes. On the second place in terms of the votes is the 1.16-1.18 (14%) interval, followed also by the 1.26-1.28 interval with only 13% of the votes. Moreover, 62% all survey participants believe the Cable is to fall under 1.24.