- Pending orders in 100-pip range from the current market is currently negative (41% bullish / 59% bearish)
- The pair could fall in value, with the closest support at 1.5542 (2014 low)
- An advance is also a possibility, but it should be limited by the weekly PP at 1.5654
- Upcoming events: US Core Durable Goods Orders, US Final GDP, US New Home Sales, UK
UK public finances improved considerably in November, as the central government borrowed less, while more tax receipts were received. The Office for National Statistics said public sector net borrowing, which strips out state-controlled banks, totaled 14.1 billion pounds in November, down 10% from the previous year. The improvement was driven largely by less central government borrowing as tax receipts in November advanced by 5.5%, compared with the last year's data. Tax receipts in November were boosted mostly by an increase in indirect taxes including VAT, income tax and stamp duty, the ONS said.
At the mean time, the number of Americans seeking first-time unemployment benefits declined in the week before the last one and remained near the lowest level in 14 years, the latest sign of strengthening labour market. Jobless claims fell by 6,000 to 289,000 in the week ended December 13, the fewest since early November, a Labor Department report showed. New applications for unemployment benefits have stayed below the 300,000 threshold in 13 of the past 14 weeks, the longest such streak since the first half of 2000. The four-week moving average, which irons out volatile weekly data, declined by 750 to 298,750. Meanwhile, companies continue to hire more workers and job creation is set for the best year since 1999. The American economy added a seasonally adjusted 321,000 new jobs in November, a separate report showed earlier this month, while the jobless rate was at 5.8%. The Fed officials now expect the jobless rate will decline to 5.2% or 5.3% in 2015, putting the unemployment rate in a zone policy makers consider "full employment".
Calm week ahead
This week will be very calm and tranquil, since the Christmas holidays are starting. Nonetheless, there is one day which should be watched - Tuesday, when US core durable goods orders and final GDP will be released, while also UK's final GDP will be released and country's current account.
GBP/USD trades above 1.56
Already for more than a month GBP/USD is testing the strength of the down-trend, especially its upper trend-line, that started to take its shape on July, when the pair reached a six-year high at 1.7193. The pair has returned to trade inside the boundaries of the down-trend, after beaching it to the upside. The pair is hovering around the lower levels this year, namely around 1.1550 and there still is a downside risk of the pair falling lower, since it is back on its down-trend.Daily chart
The second part of the week was rather bearish for the pair,as it fell to the lowest level this year; however, it has recovered since then. Currently, the GBP/USD cross is sitting above the 1.56 level and around the weekly PP at 1.5654. Despite the monthly technical indicators are pointing upwards, we are still more bearish towards the pair. Nevertheless, most likely we will see a sideways movement through the week.
Hourly chart
Bullish positions increase, while pending orders set to sell
As for the orders, as many as 59% of them are to sell the Pound against the US Dollar. It proclaims that, if the pair appreciates, in the near-term it may be stopped by the weekly PP and down-trend's resistance level; moreover, these levels could push the pair downwards.
Although, if the pair returns to trade in the boundaries of the down-trend then the first wave of the bearish pressure could be stopped by this year's low at 1.5542.
Spreads (avg,pip) / Trading volume / Volatility
Community expects Pound slide lower
Jignesh, one of the community members participating in the survey, sees the pair depreciating towards the 1.55 mark "GBP/USD has faced rejection off a downwards trend line on the 1H and continues it's bearish momentum. 1.5500 should offer decent support for the pair". However, he adds that "Wednesday's FOMC will be a big driver for the USD".
Meanwhile, traders, who were asked regarding their longer-term views on GBP/USD between Nov 11 and Dec 11 expect, on average, to see the currency pair at 1.5721 by the mid-March. Though the largest portion of participants, namely 17% of them, believe the exchange rate will rebound to the 1.60/1.62 region in sixty days. Additionally, 45% of the market participants see the pair falling below the 1.56 mark.