- The number of buy orders dropped down from 56 to 51%
- 55% of traders have a positive outlook towards the Sterling
- Key demand area is at 1.2881/1.2859
- The closest resistance is around 1.3120
- Upcoming events: UK Net Lending to Individuals, US Final GDP, US Jobless Claims, US Goods Trade Balance, US Pending Home Sales, Fed Chair Yellen's Speech
New orders for US manufactured core durable goods dropped less than expected last month, official figures revealed on Wednesday. According to the US Department of Commerce, total new orders for durable goods were unchanged on a monthly basis in August, following the preceding month's downwardly revised gain of 3.6%, whereas market analysts expected new orders to drop 1.0% in the eight month of the year. August's flat reading was mainly driven by a 21.9% drop in demand for civilian aircraft. Excluding goods like motor vehicles and machinery, durable goods orders declined 0.4% in August, while economic desks penciled in a fall of 0.5%. The previous month's rise in core new orders was revised down to 1.3% from the originally reported 1.5%.
Other data released by the Energy Information Administration on Wednesday showed crude oil inventories in the United States fell 1.9 million barrels in the week ended September 23, whereas analysts anticipated a rise of 2.4 million barrels after the preceding week's 6.2 million-barrel drop. After the release, WTI crude rose 1.1% to trade at $45.18 per barrel, whereas Brent crude advanced 1.5% to trade at $46.66 on the NYSE.
US Final GDP, Initial Jobless Claims, Goods Trade Balance and Yellen's Speech
On Thursday most attention is to be paid to the US fundamental data, such as the Final GDP, the Initial Jobless Claims and the Goods Trade Balance. The most important one is the Final GDP, as it shows the monetary value of all the goods, services and structures produced within a country in a given period of time. It is a gross measure of market activity, because it indicates the pace at which a country's economy is growing or decreasing. As for the Jobless Claims, they are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. The Goods Trade Balance shows the difference between imported and exported goods. This data provides early insight into the Trade Balance, as it takes up a rather large part of it. Another event to pay attention to is Fed Yellen's Speech later today. Her words could turn the tide of the performances of USD-pairs.
GBP/USD: downside risks still present
The Cable surprised with its performance on Wednesday, as it remained completely flat after experiencing some downside pressure. The pair is expected to experience another leg down today, with technical indicators bolstering this possibility. The weekly PP on top of the 1.30 major level remains the closest support, whereas the key one is still located around 1.2880, represented by the Bollinger band, the weekly and the monthly S1s. However, the key support is unlikely to be reached today, as the 1.2950 level could also limit the losses, as it has been doing for nearly two weeks now.
Daily chart
On the hourly chart the pair is seen breaking the resistance trend-line of the descending channel pattern, as well as the 200-hour SMA. This opens the door for more bullish momentum to come, which contradicts with the outlook of the daily chart. As a result, the Cable is likely to be driven by other factors, such as fundamental events.
Hourly chart
Traders remain undecided
Today 55% of traders have a positive outlook towards the Sterling, compared to 51% on Wednesday. The number of buy orders, on the other hand, dropped down from 56 to 51%.
A different situation is observed elsewhere. For example, 73% of positions open at OANDA are currently long. This is more than the share of shorts (27%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 67% of traders being long and 33% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect no major changes
By the end of the next three months traders expect the Cable to be more or less at the same level where it is now. While the current price is around 1.30, the average forecast for December 29 is 1.3139. Interestingly enough, however, the 1.30-1.32 interval is not the most popular one, having only 10% of the votes. Most of the votes are concentrated in 1.28-1.30 (17%) intervals. Furthermore, 52% all survey participants believe the Cable is to remain above 1.30.