- Pending orders are equally divided between buy and sell ones
- Market sentiment is bullish at 73%
- Immediate resistance is around 1.21
- The closest support is at 1.2045
- Upcoming Events: UK May's Speech, UK Average Earnings Index, UK Claimant Count Change, UK Unemployment Rate, US CPI and Core CPI, US Capacity Utilization Rate, US Industrial Production, US Beige Book, Fed Chair Yellen's Speech
In the United Kingdom, demand for bank lending among small and medium-sized enterprises dropped in the last quarter of 2016 in the wake of the country's decision to leave the European Union, according to the Bank of England's quarterly Credit Conditions Survey released on Friday. Furthermore, British banks suggested that the demand for bank credit by SMEs will remain low in the upcoming months. In the meantime, the demand for credit among large businesses remained unchanged in the reported quarter, following a large slip posted in the preceding quarter. In addition, the Bank said the availability of secured credit for households held steady in the last three months of 2016 and is likely to rise moderately in the first quarter of 2017. Despite an increase in the availability of unsecured credit in the past quarter, it is expected to fall during the first quarter of 2017 due to stricter terms and conditions of credit card offers introduced in the three month period to December.
The Bank of England was looking for signs of damage to British companies, business investment and overall economic growth after the vote to leave the European Union. The survey was carried out between November 21 and December 9.
UK May's Speech is the main topic today
The most important upcoming event today is UK Prime Minister's Speech, as she is expected to unveil all details concerning Brexit, the main subtopic of which is UK's access to the European single market. Any negative news on this specific question are likely to send the Pound plummeting. Tomorrow attention should be paid to the UK's employment data, namely the Claimant Count Change, the Unemployment Rate and the Average Earnings Index, while also turning attention to the US figures, such as the CPI and Industrial Production.
GBP/USD surges ahead of UK May's speech
As was anticipated, the British Pound partially recovered from the bearish gap yesterday, but with the 1.21 level still remaining intact. Today, however, the Sterling is under high risk of falling even under the 1.19 mark, with UK Prime Minister's speech being the driver, as she is expected to unveil all Brexit details today. Hard Brexit clues are likely to be devastating for the Pound, but positive news could even trigger a surge above 1.22, meaning the two closest resistances are to be pierced. However, technical indicators are unable to confirm either scenario, as they keep giving mixed signals in the daily timeframe.
Daily chart
Even though the British Pound keeps strengthening against the US Dollar in the early trade, it has now reached the 200-hour SMA, where the exchange rate is expected to bounce back. The wedge pattern is likely to be preserved, which a bearish development will provide, with the lower trend-line remaining out of reach at the moment.
Hourly chart
Traders mostly bullish
Although not as strong as yesterday, but market sentiment remains bullish at 73% (previously 73%). At the same time, all pending orders are equally divided between the buy and the sell ones.
A similar situation is observed elsewhere. For example, 64% of positions open at OANDA are currently long. This is more than the share of shorts (36%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 61% of traders being long and 39% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
By the end of the next three months traders expect the Cable to fall under the 1.22 major level, as 56% of survey participants believe so. While the current price is around 1.20, the average forecast for April 17 is 1.2175. However, the 1.14-1.16 interval is now the most popular one, having 17% of the votes, while on the second place are the 1.16-1.18, the 1.18-1.20 and the 1.20-1.22 price ranges, with 13% of poll participants choosing each of them. Furthermore, the 1.22-1.24 interval was chosen by 11% of the voters.