GBP/USD attempts to surpass 1.52

• Buy orders now account for 53% of the market
• 41% of all positions are long
• 16% of traders expect the Sterling to cost between 1.44-1.46 dollars after three months
• Nearest support lies around 1.5080, represented by the 100-day SMA and the weekly PP, while closest resistance rests at 1.5232, namely the Bollinger band
• Upcoming events: US Markit PMI Composite, US Services PMI, UK GDP, US Consumer Confidence

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The Sterling was one of the best performers last Friday, as it appreciated against most major peers. The Pound added the most against the Loonie (1.12%), following with 0.87% gains versus the US Dollar, 0.80% versus the Swiss Franc and 0.71% versus the Kiwi. The Aussie was the most resilient, allowing the British currency to add only 0.30% against it.

Retail sales in Britain unexpectedly declined last month, driven down by a plunge in sales at petrol stations. According to the Office for National Statistics, the volume of sales including auto fuel fell 0.5% in March. In contrast, economists had forecast a 0.4% rise. Excluding petrol, sales climbed 0.2% in March, versus a 0.6% increase in February, which was revised down from an initial estimate of 0.7%. For the three months through March of 2015, sales edged up 0.9%, down from 2.2% in the first quarter of 2014. Economists said the retail data could herald slower growth in the beginning of the year. UK economic growth data for the first three months of 2015 are due to be published next week.

A separate report showed the budget deficit in the fiscal year ended March narrowed more than expected. The shortfall was the smallest for any March in 11 years. Net borrowing excluding public-sector banks came in at 7.4 billion pounds. Government coffers in March were filled by an increase in receipts from income and corporation tax, as well as VAT receipts. Revenue increased 3% and spending declined 3.1%. It resulted in the full-year deficit at 87.3 billion pounds, below the 90.2 billion pounds, the Office for Budget Responsibility estimated last month. The OBR predicts public sector borrowing to fall each year to eventually reach a slight surplus in 2018-19.

In light of the recent data, Ian Stewart, chief economist at Deloitte, reckons "the UK has quite good momentum," which largely stems from the exports and the consumer. He also sees "decent recovery" in the investment, and this is likely to result in the UK being "one of the fastest growing economies in Europe." At the same time, Steward does not consider the elections to be a major risk factor for this recovery, though he does acknowledge a likelihood of greater volatility in financial markets in the run-up to the general election.

According to the economist, the general effect of strong economic data out of the UK should be supportive of the Sterling, particularly against the Euro, while concerning the speculations on the UK leaving the European Union, Stewart thinks this is a low-probability event, with the chances that are "well below 50%," since most political parties and a large portion of business and media would likely campaign in favour of continued membership.

Jamie Jemmeson, head of trading at Global Reach Partners, talks about the upcoming elections in the UK. He says that the UK is sailing into murky waters right now, with no clear definition of what is going to happen next. Jamie adds that this is also going to lead to more Sterling volatility, so the investor has to be cautious.

He also gave his prospects on the effect the elections might have on the British currency: "I think that generally in terms of you looking at Sterling volatility, a Tory Government would be more positive for the Pound." He still mentioned that "Generally, if you look at historically how the Pound has re-answered, it prefers a Tory Government."

UK GDP and US Consumer Confidence

David Starkey, market analyst from Cambridge Mercentile, said that the BoE is most likely going to leave the rates unchanged. However, he also mentioned that "there is certainly a bit of dissent amongst the BoE, their chief economist suggested that there could be room for a cut if inflation continues to track negative, while Carney has openly and publicly suggested that the next move is going to be a hike." The analyst also gives his prospects for the near future, saying that "dissent is probably good, the BoE is going to be analysing the situation closely, the majority of the members still lean towards a hike, one descending voice does not suggest that it is going to be a cut in the near term."

GBP/USD attempts to surpass 1.52

The Cable exceeded expectations, as it edged up a lot higher at the end of last week. The initial resistance was easily pierced, as well as the next cluster at 1.5156. Ultimately, the GBP/USD pair stabilised at 1.5186. Today, the Sterling is likely to extends its rally and overcome the 1.52 level, while immediate resistance rests at 1.5234, represented by the Bollinger band. Nonetheless, technical indicators keep showing mixed signs.

Daily chart

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Hourly chart

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Market sentiment remains bearish

Market sentiment of SWFX traders remains bearish, with 41% of all positions being long. The portion of buy commands, however, added eight percentage points. The orders now account for 53% of the market.

SAXO Group bearish traders' sentiment returned to its previous level of 65% (previously 67%). Meanwhile, OANDA's traders also have a bearish outlook towards the Pound, with 47% of all positions being long.

Spreads (avg, pip) / Trading volume / Volatility

16% of traders expect the Sterling to cost between 1.44-1.46 dollars after three months

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