- The share of orders to acquire the Sterling increased from 36 to 57%
- 67% of all open positions being long
- The nearest resistance is the weekly PP at 1.2975
- Support is around 1.2870
- 51% of traders reckon GBP/USD will be at 1.30 or higher in three months
- Upcoming events: Empire State Manufacturing Index, NAHB Housing Market Index, UK CPI, UK PPI Input, UK RPI, US Building Permits, US CPI and Core CPI, US Housing Starts, US Capacity Utilization Rate, US Industrial Production
Sales at US retailers unexpectedly fell in July, official data revealed on Friday. According to the Department of Commerce, retail sales came at a seasonally adjusted 0.0% in the reported month, compared to the previous month's upwardly revised figure of 0.8%, while economic desks pencilled in a deceleration to 0.4%. Furthermore, core retail sales, excluding automobiles, dropped a seasonally adjusted 0.3% in the seventh month of the year, whereas the preceding month's gain was revised up to 0.9% from the originally reported increase of 0.7%, whereas analysts expected a decrease to 0.2%. Separate reported released by the Department of Labor on the same day showed that US producer prices returned to contraction in July after three months of consecutive growth, as the Producer Price Index dropped 0.2% on an annual basis in the reported month, following the 0.3% rise registered in July. Month-over-month, US factory gate inflation declined 0.4% in July, compared to the 0.5% gain seen in the preceding month, while market analysts anticipated a fall to 0.1% in the reported period.
Meanwhile, the University of Michigan Consumer Sentiment survey released on Friday showed that mood among US shoppers improved in August, as it preliminary Consumer Confidence Index rose to 90.4, compared to July's final print of 90.0, while markets predicted the Index to come in at 91.5 in the reported period.
NAHB Housing Market and Empire State Manufacturing Indexes are the only relevant events this Monday
As on most Mondays, there are not many fundamental events scheduled for today. In fact, there are only two events that could have an impact on the Cable's performance, namely the NAHB Housing Market Index and the Empire State Manufacturing Index. The NAHB Housing Market Index presents home sales and expected home building in the future, indicating housing market trend in the United States. The growth rate of the housing market affects the USD volatility. The Empire State Manufacturing Index gauges business conditions for New York Manufacturers. Generally speaking, a positive result indicates bullish for the US Dollar, while a negative result shows poor growth of the Buck.
GBP/USD on the edge of falling under 1.29
Even weak US fundamental data on Friday was insufficient to trigger a GBP/USD rally, being that the pair erased all intraday gains and ended the day with a 34-pip loss. Today the Cable faces a relatively strong support area 1.2870, represented by the Bollinger band, the weekly and the monthly S1s. However, a much stronger demand area lies 100 pips lower, which is bolstered by a three-year support line, but the exchange rate is unlikely to fall that low just yet, due to lack of impetus. Nevertheless, technical studies suggest that another leg down is probable, as they are giving bearish signals in the daily timeframe.
Daily chart
On Friday the Cable confirmed the descending channel's upper border and, as anticipated, began moving downward. The exchange rate is now expected to keep moving lower until price reaches the channel's lower boundary, where another rebound is likely to take place.
Hourly chart
Still no consensus
Sentiment remains moderately bullish, with 67% of all open positions being long (previously 64%). At the same time, the share of orders to acquire the Sterling increased from 36 to 57%.
Indecision appears to be widespread, as the same neutral sentiment is observed among the traders of other brokers. At OANDA, 63% of positions are long and 37% are short. The sentiment at Saxo Bank is now somewhat bullish, as the numbers of longs and shorts each take up 58% and 42% of the market, respectively.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.30 in three months
Slightly more than half of traders (51%) believe the British currency is to cost 1.30 or more dollars after a three-month period. The most popular price interval, however, was selected by 20% of the voters, namely the 1.24-1.26, while the second most popular choices imply that the Sterling is to cost either between 1.28 and 1.30 dollars or between 1.34 and 1.36 dollars in three months, both chosen by 14% of the surveyed. At the same time, the mean forecast for Nov 15 is 1.3157.