GBP/USD attempts to climb over 1.44

Source: Dukascopy Bank SA
  • The portion of orders to acquire the Sterling increased from 36 to 59%
  • Bulls take up 56% of the market
  • The Bollinger band, the 100-day SMA and the weekly R2 form resistance around 1.4450
  • Support is at 1.4339, represented by the weekly R1
  • 56% of traders reckon GBP/USD will be at 1.44 or lower in three months
  • Upcoming events: UK Claimant Count Change, UK Unemployment Rate, UK Average Hourly Earnings, US Existing Home Sales, US Crude Oil Inventories
© Dukascopy Bank SA

The British currency retained most of it strength on Tuesday, having outperformed most major peers that day. Amid the return of risk appetite, the Pound experienced the largest gain against the Yen, namely 1.20%. Another significant rally of 0.84% was registered against the US Dollar, followed by a 0.60% gain versus the Swissie and 0.45% versus the Euro. At the same time, the Sterling remained relatively unchanged against the Aussie and the Loonie, surging only 0.01% and falling 0.05% lower, respectively. The only significant decline was detected against the Kiwi, which in turn strengthened due to a strong reading of the GDT Price Index yesterday.

Bank of England Governor Mark Carney took a chance to voice a fresh set of concerns about threats the UK economy may face should voters choose to exit from the European Union. In testimony to lawmakers in the House of Lords Carney said that a vote in favour of leaving the EU could result in "an extended period of uncertainty about the economic outlook" in the UK, with the potential to hurt trade, investment and growth. It could also undermine asset prices and the supply of credit in the economy, as well as make it more expensive for Britain to finance the gap added. Carney has previously described Brexit as the main domestic risk to Britain's financial stability. The Governor also stressed the benefits for Britain's economy from its open trading relationship with the EU, drawing criticism from some pro-Brexit lawmakers.

At the same time, Michael Gove, a senior government minister who supports Brexit, described a list of potential gains to the UK of leaving the bloc, including reducing red tape and savings from no longer having to pay into the EU budget. Gove added that the UK would also be able to freely pursue its own free-trade deals with the rest of the world and could be confident the EU would still want to trade freely with Britain, given that the UK was the destination for some 300 billion pounds of EU exports in 2014.


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UK labour data and US Existing Home Sales are the main events today



A number of UK labour data is due today, such as the Average Hourly Earnings, the Unemployment Rate and the Claimant Count Change. All of this data are released by the Office for National Statistics today at 8:30 AM GMT. The most important here are the Average Hourly Earnings, as they are a leading indicator of consumer inflation, however, sharp changes in other figures also tend to have a serious impact on the Sterling. From the US side the only relevant even to influence the Cable will be the US Existing Home Sales, which are released by the National Association of Realtors, and provide an estimated value of housing market conditions. As the housing market is considered to be a sensitive factor to the US economy, it generates some volatility for the USD.



GBP/USD attempts to climb over 1.44

The Us currency weakened on Tuesday, allowing the British Pound to take the upper hand once more and reach the 1.44 mark over the day. A break out of the falling wedge pattern implied that more bullish momentum was likely to follow, with the Cable aiming towards the resistance line at 1.45. Today only one resistance cluster separates the GBP/USD currency pair from reaching that goal, formed by the Bollinger band, the 100-day SMA and the weekly R2. However, we should not rule out the possibility of the exchange rate returning below 1.4350, with the nearest support represented by the weekly R1.

Daily chart

© Dukascopy Bank SA

The GBP/USD pair breached through the resistance trend-line yesterday and continued climbing higher, even reaching a fresh April high of 1.4420. However, there was no sufficient impetus to keep the pair elevated, thus, a correction today is possible. On the other hand, the Sterling has the potential to reach the second down-trend at 1.45 if the bullish momentum prevails.

Hourly chart

© Dukascopy Bank SA



Sentiment remains bullish

Market sentiment remains bullish, but taking up 56% of the market, compared to 57% yesterday. At the same time, the portion of orders to acquire the Sterling increased from 36 to 59%.

At OANDA market sentiment is now close to equilibrium, with only 51% of their open positions being long, compared to 57% on Tuesday. Meanwhile, the sentiment at Saxo Bank remains bearish, with 57% of their traders now holding short positions (previously 55%)..














Spreads (avg, pip) / Trading volume / Volatility



Majority sees GBP/USD below 1.44 in three months

© Dukascopy Bank SA

The majority of traders (56%) 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 18% 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 20 is 1.4221.


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..

© Dukascopy Bank SA

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