- The share of sell orders inched up from 49 to 55%
- 54% of all open positions are long
- Immediate resistance is at 1.2545
- The closest support is around 1.2490
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Upcoming events: US PPI and Core PPI, US Initial Jobless Claims, US Preliminary Consumer Sentiment
Employment data released on Wednesday confirmed the view that pay growth in the United Kingdom slowed significantly following the country's decision to leave the European Union, which boosted inflation across the country amid the sharp fall in the value of the Pound. The Office for National Statistics reported that wage growth adjusted for inflation climbed just 0.2% in the three-month period to February. Including bonuses, average hourly earnings advanced 2.3%, unchanged from the prior period, whereas analysts anticipated a 2.1% gain. Pay growth is closely followed by the Bank of England, as it is tied to consumer spending, which account for more than 60% of the UK economy. At its latest meeting, the BoE said that consumer inflation would average 2.7% this year.
Meanwhile, the unemployment rate came in at a record low of 4.7%, unchanged from the three-month period to January and in line with analysts' expectations. The number of Britons filing for unemployment aid rose 25,500 to 765,400 in March, the largest gain since July 2011, compared to the preceding month's downwardly revised fall of 6,100, while markets held expectations for a decline of 10,200. The data also showed that job vacancies advanced 16,000 to a record high of 767,000.
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US Jobless Claims and PPI are the only relevant events today
On Thursday, once again focus turns to the US fundamentals, namely the Initial Jobless Claims, the PPI and Core PPI. The initial Jobless Claims measure the number of individuals who are unemployed and are currently receiving unemployment benefits. They present the strength in the labor market. A rise in this indicator has negative implications for consumer spending, which discourage economic growth. As for the US PPI, it measure 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. In Core PPI, however, those volatile products, such as food and energy, are excluded in order to capture an accurate calculation.
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GBP/USD takes a shot at breaking the down-trend
The Cable's upside development yesterday caused the six-month down-trend to be put to the test again, pointing to a possible trend reversal. Technical indicators once more suggest the British Pound is to outperform the Greenback, but even if the resistance line gets fully pierced, there are still obstacles on the Cable's path, the main one being the 200-day SMA around 1.2634. Nevertheless, in case of another bullish development today gains are unlikely to exceed the 1.26 major level. On the other hand, a set of positive US fundamentals could provide the Buck with a sufficient boost, which would result in the pair's decline and a solid reconfirmation of the bearish trend-line.
Daily chart
On the hourly chart the Cable is seen forming an ascending channel pattern, with a rather sharp angle. The channel implies that a breakout to the downside is the most likely scenario, which could occur today and, thus, confirm the bearish trend-line of the daily chart.- Hourly chart
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Traders mostly bullish
Today only 54% of all open positions are long (previously 55). At the same time, the share of sell orders inched up from 49 to 55%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA grew more bearish over the day, but there are still not that much more bears than bulls, namely 55% of all open positions are short and the remaining 45% are long. Meanwhile, sentiment at Saxo Bank once again worsened over the day, with 53% of traders now being long and the other 47% being short 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 1.22 major level, as 56% of survey participants believe so. While the current price is around 1.24, the average forecast for July 13 is 1.2444. The 1.18-1.20 range is now the most popular price interval, having 19% of the votes, while on the second place are the 1.20-1.22 and the 1.30-1.32 price ranges, with 14% of poll participants choosing each of them. Furthermore, the 1.26-1.28 interval was selected by 12% of the voters.