- 52% of all pending orders are to purchase the British currency
- There are currently 52% of traders holding short positions
- The nearest support is at 1.3050
- Immediate resistance is around 1.3160
- 51% of traders reckon GBP/USD will be at 1.30 or lower in three months
- Upcoming events: US ADP Non-Farm Employment Change, US Pending Home Sales, Chicago PMI, US Crude Oil Inventories
Confidence among American shoppers improved unexpectedly in August, according to the Conference Board's monthly survey. The survey's Consumer Confidence Index increased to 101.1 points in the eight month of the year, compared to July's reading of 96.7, while market analysts anticipated a slighter acceleration to 97.1 in the reported month. Nevertheless, back in August 2015, the indicator was higher at 101.4 points. The survey is a closely-followed barometer of consumer attitudes towards business conditions, personal finances, jobs and short-term outlook. The data showed that 30% of respondents stated that business conditions were "good" in August, following July's 27.3%, whereas 18.4% stated conditions were "bad", unchanged from last month. 17.3% of respondents predicted an improvement in the next six months, compared to last month's 15.7%, while 11.1% predicted deterioration, down from July's 12.4%. The share of respondents expecting their incomes to improve remained resilient; however, the outlook on the job market was mixed.
Consumer sentiment among Americans remained in the positive territory for more than a year. A reading of 90 or above indicates economic expansion. The US economy is mostly driven by consumer spending, which accounts for about 70% of all economic growth.
US ADP Non-Farm Employment Change is the main event today
Today all attention is to be paid on the US ADP Non-Farm Employment Change. It is a measure of the change in the number of employed people in the US. Generally speaking, a rise in this indicator has positive implications for consumer spending, stimulating economic growth. So a high reading is traditionally seen as positive, or bullish for the USD, while a low reading is seen as negative, or bearish. Another relatively important event will be the US Pending Home Sales. It is a leading indicator of trends of the housing market in the US. It captures residential housing contract activity of existing single-family homes. As the housing market is considered as a sensitive factor to the US economy. It generates some volatility for the USD.
GBP/USD attempts to reclaim 1.31
The Sterling experienced another leg down on Tuesday, falling under 1.31 major level. Nevertheless, technical indicators retain bullish signals today, which implies that the US jobs data today could disappoint, causing the US Dollar to weaken. As a result, the British Pound would climb back over the 1.31 mark, meeting resistance only at 1.3160, represented by the weekly and the monthly PPs. However, despite bullish studies, risks of the Cable experiencing a fifth consecutive loss exist, in which case even the 1.30 psychological level could be put to the test.
Daily chart
Tuesday ended with the Cable breaking out of the falling wedge pattern, but the pair appears to have entered a phase of consolidation now. The 1.3120 level is providing psychological resistance, as the GBP/USD was unable to climb over that level since Monday. The lower borders is the 1.3060 mark, which also kept the Cable elevated since the beginning of the week.
Hourly chart
Still no consensus
There are currently 52% of traders holding short positions (previously 53%). At the same time, 52% of all pending orders are to purchase the British currency, compared to 48% on Tuesday.
Indecision appears to be widespread, as the same neutral sentiment is observed among the traders of other brokers. At OANDA, 52% of positions are long and 48% are short. The sentiment at Saxo Bank is equal to OANDA's, 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 (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 1.34-1.36 one, selected by 14% of the voters. The second most popular choice implies that the Sterling is to cost between 1.26 and 1.28 dollars in three months, chosen by 13% of the surveyed. At the same time, the mean forecast for Nov 31 is 1.3054.