- The number of sell orders increased, namely from 60 to 63%
- 61% of all open positions are now long
- Immediate resistance is around 1.2460
- The closest support is at 1.2408
- Upcoming events: UK CBI Industrial Order Expectations, US Building Permits, US Housing Starts
Britain's retail sales advanced unexpectedly during previous month as Black Friday discounts led consumers to splurge on electronics and household goods. According to the Office for National Statistics, the volume of goods sold in stores and online went up 0.2% from October. Excluding auto fuel, sales were up 0.5% while online shopping, soared 3.8%. Meanwhile, no change was forecast in a Bloomberg survey. It is worth to point out that increase follows a 1.8% jump in October when cooler temperatures spurred demand for winter clothing. It means that sales will grow in the fourth quarter unless they drop 6.9% in December. These figures suggest consumer confidence remains buoyant in the wake of the Brexit vote but headwinds are building.
In the meantime, the Bank of England continued its freeze on interest rates on Thursday with its last monetary policy decision of a mixed year for the UK economy. Today's minutes show that the Bank has revised its inflation forecasts down a little, due to the recent recovery in Sterling. Following the decision, the Pound has fallen sharply against the US dollar.
US Building Permits is the only significant event
On Friday there is only one relevant event to influence the GBP/USD, namely the US Building Permits. Released by the US Census Bureau, it shows the number of permits for new construction projects. It implies the movement of corporate investments (US economic development). It tends to cause some volatility to the USD. Normally, the more growing number of permits, the more positive it is for the USD.
GBP/USD under the risk of falling under 1.24
The negative for the British Pound scenario prevailed yesterday, with the wedge pattern broken to the downside and the 1.25 major level also getting crossed. The Cable managed to find support only in front of the 1.24 mark, which is bolstered by the weekly S2. As technical studies keep giving bullish signals today, a correction could occur, but with the 1.25 level most likely remaining intact. On the other hand, a breach of the wedge pattern should be accompanied by more bearish momentum, in which case a slump under 1.24 is to take place, with the next support in sight being the Bollinger band around 1.2343.
Daily chart
With the trend-line failing to prevent the pair from declining yesterday, the GBP/USD currency pair found support only at the 1.24 mark. In case demand here is not sufficient, bears could continue pushing the pair lower towards 1.2350, where some support could still be met from the descending channel's trend-line of the daily chart.
Hourly chart
Traders mostly bullish
Market sentiment slightly improved over the day, as 61% of all open positions are now long (previously 60%). At the same time, the number of sell orders increased, namely from 60 to 63%.
A similar situation is observed elsewhere. For example, 56% of positions open at OANDA are currently long. This is more than the share of shorts (44%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 59% of traders being long and 41% 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 higher than the level where it is now. While the current price is around 1.24, the average forecast for March 16 is 1.2529. Furthermore, the 1.28-1.30 and the 1.30-1.32 intervals are now the most popular ones, having 13% of the votes each. On the second place in terms of the votes are the 1.16-1.18 (11%), 1.18-1.20 (11%) and the 1.32-1.34 (11%) intervals, followed also by the 1.24-1.26 interval, with only 10% of the votes. Moreover, 59% all survey participants believe the Cable is to fall above 1.24.