- 60% of all open positions are long
- 54% of all pending orders are to purchase the British Pound
- The nearest resistance is located around 1.3445
- Support is at 1.3230
- 58% of traders reckon GBP/USD will be at 1.46 or lower in three months
- Upcoming events: US GDP Annualized, US CB Consumer Confidence, FOMC Member Powell Speech
As reported by the US Census Bureau, there were 1.164 million constructions of residential buildings The UK Public Sector Net Borrowing figure improved with the latest release, which showed that the borrowing was at £9.7 billion in May, beating the £9.35bn forecast. Moreover, the April's data was also revised up to £8.2 billion from the initial £6.58 billion, meaning that it was significantly worse than first thought. An increase in the deficit has been detected mostly due to higher government spending, which rose to £56 billion, while central government investment rose up to 2.8%, followed by an increase in debt interest to 16.7%. There was also a downward revision to net borrowing in the preceding year, namely down to £74.9 billion, down £16.7 billion in comparison to the year before that, as reported by the Office for National Statistics.
Nevertheless, according to the Office for Budget Responsibility's March budget review, this figure is still above their target of £72.2 billion. The OBR also kept revising its medium-term forecasts, amid the government receipts failing to meet expectations, with them anticipating the government to miss its surplus target only starting from 2019. Overall, debt keeps rising, excluding taxpayer-backed banks, which was equal to 83.7% of GDP at the end of May, or £1.6 trillion.
US GDP Annualized and CB Consumer Confidence
Attention shifts to US data, as there are no events of significance from the UK today. First event is the US GDP Annualized, which shows the monetary value of all goods, services and structures produced within a country in a given period of time. GDP Annualized is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Another important event is the US CB Consumer Confidence, which captures the level of confidence that individuals have in economic activity. A high level of consumer confidence stimulates economic expansion while a low level drives to economic downturn.
GBP/USD in limbo around June 24 low
Monday ended with the Sterling sustaining another loss against the US Dollar, but with the 1.3230 level, namely the post-Brexit's low, limiting the losses. The Cable remains weak, but a possibility of a rebound now exists, as technical indicators are giving mixed signals. Meanwhile, the Bollinger band acts as the closest resistance, located around 1.3445, but a surge much higher might also occur if the UK parliament decides to schedule a second EU referendum today. At the same time, any sharper downside developments should not exceed the 1.2942 level, where the weekly S1 is located.
Daily chart
The British currency edged lower against the Buck, remaining under four-week trend-line, indicating that more bearish momentum could follow. However, political factors mostly drive the Cable nowadays, thus, the outcome might be unpredictable, such as a surge back to 1.40.
Hourly chart
Bears are now outnumbering the bulls
There are slightly more long positions today (60%), compared to 56% on Monday. In the meantime, 54% of all pending orders are to purchase the British Pound (previously 48%).
Compared to Monday, there are also slightly more bears at OANDA - they take up 57% of the positions open with the Canada-based broker. Sentiment at Saxo Bank is still bearish, as here the number of bears exceeds the number of bulls by 12 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.46 in three months
Exactly half of traders (58%) believe the British currency is to cost 1.46 or less dollars after a three-month period. The most popular price intervals was selected by slightly less than a fifth (14%) of the voters, namely the 1.36-1.38 one, while the second most popular choice implies that the Sterling is to cost either between 1.44 and 1.46 or between 1.46-1.48 dollars in three months, both chosen by 12% of the surveyed. At the same time, the mean forecast for Sep 28 is 1.4436.