- The number of sell orders edged up from 45 to 59%
- 57% of all open positions are long
- The nearest resistance is around 1.3100
- Immediate support is at 1.3044
- 51% of traders reckon GBP/USD will be at 1.30 or lower in three months
- Upcoming events: US New Home Sales, US Existing Home Sales
Britain's retail sales rose more than expected last month, fresh data from the UK Office for National Statistics revealed on Thursday. The volume of sales increased 1.4% on a monthly seasonally adjusted basis in July, compared to the 0.9% fall see in the previous month, while markets anticipated an increase of 0.1% in the reported month. Year-over-year, retail sales jumped 5.9% in the same month, following June's 4.3% rise and surpassing the 4.1% market forecast. Excluding auto fuel, retail sales grew 1.5% month-over-month in July, up from the 0.9% drop registered in June, whereas economic desks pencilled in a slight increase of 0.1%. On a yearly basis, core retail sales advanced 5.4% in the seventh month of the year, after rising just 3.9% in the preceding month, while analysts expected UK core retail sales to climb 3.6% in July. All sectors posted sales growth in July; however, the majority of the sales growth came from non-food stores rather than supermarkets.
The data covered the four-week period from July 3 to 30 after the United Kingdom voted to leave the European Union; however, analysts suggest that the reaction of the economy may be delayed by a couple of months. Moreover, they assume that the sales growth was driven mainly by the weaker Pound. Following the release, the British Pound jumped 0.4% against the US Dollar and 0.2% against the Euro.
Uneventful beginning of the week
There are no significant events to influence the Cable on Monday. However, Tuesday is also rather empty in terms of events, with the only one being the US New Home Sales, which are forecasted to worsen and, thus, weigh on the Buck. Wednesday also has only one event, namely the US Existing Home Sales. Basically, in the upcoming three days there are no events worth paying attention to that could influence the GBP/USD pair.
GBP/USD trades in murky waters
The British currency experienced a rather sharp decline on Friday, slumping back under the 1.31 major level, thus, failing to settle at a two-week high. The bearish momentum appears to have returned, so the Cable is likely to follow this path today. The weekly pivot point is the nearest support, located at 1.3044, while the second area to trigger a rebound rests only around 1.2880, represented by the Bollinger band, the weekly and the monthly S1s. Meanwhile, technical indicators in the daily timeframe now suggest that a bullish development is also possible. However, in this case the GBP/USD pair is expected to remain below the 1.31 major level, which is bolstered by the 20-day SMA.
Daily chart
The rising wedge pattern failed to last through Friday, thus, a downside breakout occurred earlier than anticipated, with the exchange rate falling down to 1.3025. In case bears take over the market today as well, losses should be limited by the 200-hour SMA, possibly allowing a slightly sharper drop towards 1.30.
Hourly chart
Still no consensus
Today 57% of all open positions are long (previously 56%), whereas the number of sell orders edged up from 45 to 59%.
Indecision appears to be widespread, as the same neutral sentiment is observed among the traders of other brokers. At OANDA, 57% of positions are long and 43% are short. The sentiment at Saxo Bank is now less bullish than before, as the numbers of longs and shorts each take up 53% and 47% of the market, respectively.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees the GBP/USD below 1.30 in three months
Slightly more than half of traders (51%) believe the British currency is to cost 1.30 or less dollars after a three-month period. The most popular price interval, however, was selected by 13% of the voters, namely the 1.26-1.28, while the second most popular choices imply that the Sterling is to cost either less than 1.22 dollars, between 1.24 and 1.26 dollars, between 1.34 and 1.36 dollars or even between 1.36 and 1.38 dollars in three months, all four chosen by 11% of the surveyed. At the same time, the mean forecast for Nov 22 is 1.3072.