- Share of sell orders went up from 56 to 61%
- 55% of traders are bulls and 45% are bears
- Immediate resistance is at 1.4680/50
- Support is represented by the weekly R2 at 1.4530
- 69% of traders reckon GBP/USD will be at 1.48 or lower in three months
- Upcoming events: MPC Rate Votes, Inflation Report, Mark Carney Speech, US Unemployment Claims
Although the data on the UK was good yesterday, Pound's bearishness was second only to performance of the US Dollar. The Sterling gained 1.34% against the Greenback, but depreciated relative to all its other major counterparts from minus 0.12% versus the Swiss Franc to minus 0.97% versus the New Zealand Dollar.
The British dominant services sector continued to expand in January, albeit concerns about financial market turbulence and the possibility of "Brexit" pushed business morale to the lowest level in three years. The Markit/CIPS services PMI climbed to 55.6 last month, up from 55.5 in December, beating expectations for a decline to 55.3. Nevertheless, the reading remained below its average of 57.2 recorded in the three previous years. The survey's findings were mixed, as new business rose at the fastest pace since July, whereas output growth was weaker compared with the three-year average trend rate and the mood among companies was gloomy. The data came ahead of the Bank of England's "Super Thursday", when the central bank will reveal its latest interest rate decision, monetary policy stance as well as the Inflation Report. The overwhelming majority of economists expect the central bank to remain pat, while traders on money markets pushed back their expectations to early 2018.
The UK's economy, which relied on the services sector to boost growth at the end of last year, is likely to grow 0.6% in the first quarter of 2016, gathering a bit of speed from estimated growth of 0.5% in the December quarter. The National Institute of Economic and Social Research forecast the economy to grow by 2.3% this year.
It is 'Super Thursday' again
Cable's volatility should be noticeably increased around the noon thanks to a number of highly important events, including the inflation report release, MPC rate votes, and Mark Carney's speech. Perhaps the Bank of England is going to finally address the issue of 'Brexit' and give insight into their response to different scenarios. At the same time, the US unemployment claims are to contribute to the turbulence in the market at 01:30 pm GMT. According to the estimates, the number of people filing for unemployment benefits should stay close to 280K.
GBP/USD to launch another attack on monthly R1
Yesterday, amid broad USD weakness the Cable soared through the weekly R2 and even managed to test the 1.4681/53 resistance area, which consists of the weekly R3 and monthly R1 levels. Since the rally amounted to more than 190 pips, today we may expect a bearish correction to take place. The price will probably stabilise near 1.4533 and then make another attempt to conquer 1.4681/53. Above this resistance GBP/USD should aim for the 55-day SMA at 1.4754.
Daily chart
The bullish outlook for the next couple of days is also implied in the hourly chart. There the exchange rate pierced through the upper boundary of the channel, thus opening the path towards 1.50 dollars, where we have the August-December trend-line.
Hourly chart
SWFS sentiment becomes neutral
The number of long positions increased by 12 pp; however, the sentiment is neutral—55% of traders are bulls and 45% are bears. Meanwhile, the share of sell orders went up from 56 to 61%.
As for the long/short ratios reported by other brokers, OANDA's traders remain net long the Sterling - 60% of them are bulls (59% yesterday). On the other hand, sentiment at Saxo Bank deteriorated and became bearish, as the share of longs decreased from 50 to 45%.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.50 in three months
The majority of traders (69%) believe the British currency is to cost 1.48 or less dollars after a three-month period. The most popular price interval was selected by slightly less than a quarter (26%) of the voters, namely the 1.42-1.44 one, while the second most popular choice implies the Pound is to cost between 1.38 and 1.40 dollars in three months, chosen by 13% of the surveyed. At the same time, the mean forecast for May 01 is 1.4518.
This week the sentiment among the Dukascopy Community members has become neutral, since now as many as 50% of all votes are bullish. The average expectation for Feb 9 stays around the 1.43 level.
According to Jignesh, "the Fed's meeting last week did not give a signal for a March rate hike." As a result, "USD strength may be limited, as the GBPUSD ranges in an area that can be viewed as multi decade support." Jignesh considers "the downside limited, as long-term speculators receive good risk to reward from this area."
In the meantime, while commenting his forecast, babanu noted that "we had similar action for the Cable as we had for the EUR/USD pair. Price opened below the weekly pivot but broke it with ease, and on the last day of the week it gave up about 240 pips." Community members reckons that "for the next week we have weekly pivot at 1.4265, so if this holds, we might see the big round number at 1.40."