- 54% of all pending orders are to acquire the Pound
- 51% of traders hold short positions
- Immediate resistance is at 1.3037
- The closest support is at 1.2934
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Upcoming events: US LAbor Market Conditions Index, US JOLTS Job Openings, US Mortgage Delinquencies, US Import Price Index, US Monthly Budget Statement
The US unemployment rate dropped unexpectedly last month, as companies created more jobs than expected. The Department of Labour reported that US firms added 211K jobs to the economy in April, following the preceding month's revised down increase of 79K jobs and surpassing analysts' expectations for a 194K gain. Data also showed that the unemployment rate fell to 4.4%, down from March's 4.5%, whereas markets anticipated an acceleration to 4.6%. Meanwhile, average hourly earnings rose 0.3% last month, up from March's climb of 0.1% and in line with forecasts. According to analysts' projections, if job creation remains strong, the US labour market will likely hit full employment already this year. Friday's better-than-expected employment report combined with low initial jobless claims and the strong services PMI pushed up the odds of a June hike by the Federal Reserve.
Furthermore, some analysts said that the economy regained positive momentum in the Q1, suggesting that the Fed will likely be forced to raise rates at a quicker than initially expected pace this year.
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No important data releases until Wednesday
There are no significant events worth paying attention to until Wednesday, when the US Import Price Index is due. It informs the changes in the price of imported products into the US. The higher the cost of imported goods, the stronger the effects they will have on inflation, redunding in a higher probability of a rate rise. Another event that could have some impact will be the US Monthly Budget Statement, which summarizes the financial activities of federal entities, disbursing officers, and Federal Reserve banks. A positive budget statement that receipts exceed budgetary outlays is seen as bullish for the USD.
Read More: Fundamental Analysis
GBP/USD leaves 1.30 unchallenged
Having outperformed the US Dollar, the British Pound approached the 1.30 major level on Friday, but with supply around this area remaining relatively strong. Consequently, another bullish development is not expected to occur, as the Cable is likely to keep weakening until the 1.28 major level is reached—that is where demand is sufficient to trigger a solid rebound. However, technical indicators in the daily timeframe are unable to confirm the pair is to edge lower today, thus, the immediate support, namely the weekly pivot point, at 1.2934 should limit any possible losses today.
Daily chart
On the hourly chart the Cable appears to have formed a rising wedge pattern, which is close to reaching its apex. A downside breakout is unlikely today, as the wedge's support line coincides with the immediate support on the daily chart. Although rising wedges usually end with their support lines getting breached, this one is also bolstered by the 200-hour SMA, which could help the pair rise above 1.30 and possibly even beyond the resistance trend-line by week's end.Hourly chart
Read More: Technical Analysis
Traders remain neutral
Traders retain a neutral sentiment, as 51% of all open positions are currently short and the remaining 49% are long. At the same time, there are only 54% of orders to acquire the Sterling (previously 57%).
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, with 63% of traders now being short and the other 37% - 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 58% of survey participants believe so. While the current price is around 1.29, the average forecast for August 08 is 1.2993. The 1.30-1.32 and the 1.32-1.34 ranges are now the most popular price intervals, both having 17% of the votes, while second comes the 1.34-1.36 interval and the third place is tied by 1.20-1.22 and 1.28-1.30, with 11% of poll participants choosing either option.