- The share of purchase orders slid from 57 to 41%
- 55% of all open positions are now long
- The 20 and 55-day SMAs, the weekly and the monthly PPs form support around 1.4240
- Resistance is at 1.4339, represented by the weekly R1
- 57% of traders reckon GBP/USD will be at 1.44 or lower in three months
- Upcoming events: US Markit Manufacturing PMI, UK CBI Industrial Order Expectations, US New Home Sales
The Sterling continued to outperform most of other major currencies, with losses registered only against the safe-haven Yen and the US Dollar. A fall in oil prices caused the commodity currencies to weaken, therefore, the Pound gained 0.89% against the Kiwi, 0.66% versus the Aussie and 0.57% against the Loonie. A smaller rally of 0.24% was detected against the Swiss Franc, while the British currency remained almost completely unchanged against the Euro, adding only 0.02%. The safe-haven Yen surged 0.41% higher versus the GBP, while the Cable edged 0.06% lower.
Britain's retail sales recorded their biggest monthly decrease in more than two years in March as Britons cut back on food and clothes in the latest sign households are nervous about the economic outlook. The Office for National Statistics said that the UK retail sales fell 1.3% in March compared with February, a much larger fall than expected. The volume of sales excluding auto fuel dropped 1.6% from February, the most since January 2014. The retail sales data is the latest in a series of disappointing data, coming after weak industrial production numbers and the first increase in unemployment in almost a year. Retail sales figures suggest that consumer spending, the driver of recent economic growth, weakened in March amid weak pay growth and a gloomier economic outlook.
The ONS also revealed that public-sector borrowing overshot official forecasts in the latest fiscal year and the national debt burden increased. A 4.8 billion-pound budget deficit in March left the full-year shortfall at 74 billion pounds, or 3.9% of gross domestic product. That compares with the 72.2 billion pounds projected by the Office for Budget Responsibility last month. The overshoot means George Osborne will have to find fresh savings in government spending, raise taxes or hope for quicker economic growth to reach his goal of balancing the government books by 2020.
US Markit Manufacturing PMI is the only event today
Friday is quiet in terms of economic data releases, with only one event to influence the Cable scheduled for today, namely the US Markit Manufacturing PMI. The Manufacturing Purchasing Managers Index (PMI) is released by the Markit Economics and which captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic conditions in the United States. Readings above 50 imply the economy is expanding, making investors understood it as a bullish for the USD, whereas a result below 50 points for an economic contraction, and weighs negatively on the currency.
GBP/USD keeps struggling to edge higher
The GBP/USD currency pair managed to reach the resistance area around 1.4450, but then erased its intraday gains, with trade closing with a six-pip loss yesterday. Over the past 24 hours the situation for the Cable did not change, as the Sterling remains somewhat supported by the ‘Bremain' confidence. The closest resistance is still represented by the weekly R1 at 1.4339, but the main target is the 1.4450 level, where the 100-day SMA coincides with the upper Bollinger band, both being bolstered by the weekly R2. Meanwhile, technical indicators retain mixed signals, suggesting that a possibility of a decline towards the tough support cluster circa 1.4235 is present.
Daily chart
The Sterling has been edging higher against the Buck since two weeks ago, experiencing some setbacks on the way. Nonetheless, the short-term trend appears to be bullish, as the resistance line is yet to be confirmed.
Hourly chart
Sentiment remains bullish
Bulls retreated again, as 55% of all open positions are now long. At the same time, the share of purchase orders slid from 57 to 41%.
At OANDA market sentiment is close to the equilibrium, with only 53% of their open positions being long, two percentage points higher from Thursday. Meanwhile, the sentiment at SAXO Bank remains bearish, with 56% of their traders holding short positions (previously 57%).
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.44 in three months
The majority of traders (57%) believe the British currency is to cost 1.44 or less dollars after a three-month period. The most popular price interval was selected by 19% of the voters, namely the 1.44-1.46 one, while the second most popular choice implies that the Sterling is to cost between 1.46 and 1.48 dollars in three months, chosen by 16% of the surveyed. At the same time, the mean forecast for July 22 is 1.4217.
Following rather negative development of the pair during April 11-15 week, participants of our weekly Community Forecasts quiz decided to become much more bearish on the Cable, as currently only 27% of them support movement to the north in course of this week.
Among the lesser part of the traders, namely the ones retaining a positive outlook towards the Cable, MR_KHALEDBADRY only commented that he expects the Sterling to increase in value, without backing his view.
Meanwhile, another active member of the Dukascopy Community, Jignesh, said that "the GBP/USD has now failed three times in making a higher high and on the 4H chart, the technical clearly point to a bearish trend." He also added that the 1.4050 remains to be a strong support which may prop up the pair, but a likely move this week is for the pair to test its lower bounds in the 1.3900 range..