- 54% of traders being long the Sterling
- The share of sell orders remains unchanged at 59%
- The nearest resistance is at 1.3170
- Immediate support is at 1.3105
- 53% of traders reckon GBP/USD will be at 1.30 or lower in three months
- Upcoming events: US New Home Sales, US Markit Manufacturing PMI, US Existing Home Sales, US Crude Oil Inventories
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.
Markit Manufacturing PMI and US New Home Sales
One of fundamental events that could have an impact on the Cable today is the US Markit Manufacturing PMI. It captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in the US. Another event is the New Home Sales, which are an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes, so as a result the demand for goods, services and the employees is stimulated.
GBP/USD to put weekly PP to the test
The Cable overperformed on Monday, having reached the 1.3150 level, rather than remaining under the 1.31 mark. Another rally will be difficult to achieve, as the nearest resistance is now represented by the monthly PP at 1.3170, which successfully kept the GBP/USD currency pair from advancing since the beginning for three weeks now. Consequently, a bearish development is quite possible, in which case the 20-day SMA right on top of the 1.31 mark will be the nearest support, but is unlikely to limit the losses if those occur. Meanwhile, technical indicators are unable to provide a clear sense of direction today.
Daily chart
The Sterling has been appreciating against the US Dollar since the beginning of the previous week and refuses to give up just yet. The pair could struggle to climb over the 1.3175 psychological level, which kept the pair at bay since August 5, but a possible up-trend is also unlikely to let the bears take over.
Hourly chart
Still no consensus
There are 54% of traders being long the Sterling today (previously 57%), whereas the share of sell orders remains unchanged at 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 52% and 48% 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 (53%) 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 1.28 and 1.30 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 23 is 1.3052.