- The portion of sell orders increased from 58 to 74%
- 64% of traders are long the Sterling
- The nearest resistance is located at 1.3033
- Support is at 1.2724
- 59% of traders reckon GBP/USD will be at 1.40 or lower in three months
- Upcoming events: BoE Governor Carney Speech, FOMC Members Tarullo and Bullard Speeches, US JOLTS Job Openings, US Wholesales Inventories, BoE Credit Conditions Survey, US Import Prices, US Crude Oil Inventories, US Beige Book, US Federal Budget Balance
According to the latest economic figures, Britain's retail sales went down last month, meaning that country is facing a lot of challenges following the vote to leave the EU. The British Retail Consortium-KPMG Retail Sales Monitor – market-leading insights tool for retailers, which provides an instant snap shot of industry performance – plunged 0.5% in the 12 months through June following a 0.5% expansion the previous month. The following data diminished for the third consecutive month in June.
Meanwhile, Britain's retailers still remain open for new businesses. The outcome from the EU referendum vote has not changed their stabile willingness of delivering for customers day in, day out or their investment in order to make people's shopping process as much comfortable as it could be, being inspired by digital and technology. Moreover, despite the harsh plunge in the pound, the time it takes for input price increases to conversion into higher shop prices will depend on a combination of different factors including further changes in the pound, commodity prices and the overall political situation.
Another quiet day today
Tuesday is also rather quiet in terms of fundamental data releases, but a number of speeches, such as the BoE Governor's and from a couple of FOMC members are scheduled for today. These speeches are likely to have some impact on the Cable today, but no substantial changes are expected to occur. Nevertheless, starting from Wednesday some data releases will be due, such as the US Import Price Index, which informs the changes in the price of imported products into the US. The higher the cost of imported goods, the stronger the effect they will have on inflation, redunding in a higher probability of a rate rise. Another important event will be the US Beige Book, which reports on the current US economic situation. Through interviews with key business contacts, economics, market experts, and other sources are gathered by each of the 12 Federal Reserve Districts. The survey gives a picture of the overall US economic growth. An optimistic view of those authorities is considered as positive, or bullish for the USD, whereas a pessimistic view is considered as negative, or bearish for the Dollar.
GBP/USD struggles to post more gains
On Monday the GBP/USD currency pair recovered from its intraday low and edged higher, barely managing to climb over the 1.30 major level, but unable to pierce the immediate resistance in face of the weekly PP. The Cable is expected to continue making its way up ever since it put the 1.29 mark to the test, ignoring the nearest resistance, with the next target being the weekly R1 at 1.3267. Technical studies, on the other hand, suggest the Pound is to fall back down, in which case the psychological 1.29 mark is likely to provide support. Sharper losses are to be limited by the demand level at 1.2724, but a drop that low is unlikely to occur today.
Daily chart
The resistance trend-line was breached on Monday, with the pair now facing the 200-hour SMA, which could reverse the recently regained bullish momentum. However, due to the falling wedge pattern being complete, only more bullish bias is expected to prevail.
Hourly chart
Bulls remain in control
Today 64% of traders are long the Sterling, but the portion of sell orders increased significantly, namely from 58 to 74%.
Compared to Wednesday, there are slightly less bulls at OANDA - they take up 56% of the positions open with the Canada-based broker. Sentiment at Saxo Bank grew stronger, as here the number of bulls exceeds the number of bears by 4 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.40 in three months
More than half of traders (59%) believe the British currency is to cost 1.40 or less dollars after a three-month period. The most popular price intervals was selected by only 14% of the voters, namely the 1.28-1.30 one, while the second most popular choice implies that the Sterling is to cost either between 1.24 and 1.26, or between 1.36 and 1.38, or 1.40 and 1.42 or even between 1.42 and 1.44 dollars in three months, all four chosen by 10% of the surveyed. At the same time, the mean forecast for Oct 12 is 1.3736.