- 54% of all pending orders are to sell the Sterling
- 61% of traders are long the Pound
- Immediate resistance is around 1.2675
- The closest support is at 1.2520
- Upcoming Events: US Initial Jobless Claims, US Goods Trade Balance, US Markit Services PMI, US New Home Sales
Britain's Supreme Court ruled on Tuesday that the UK Prime Minister Theresa May must get parliamentary approval to trigger Article 50 of the Lisbon Treaty and begin the country's two-year withdrawal from the European Union. David Neuberger, Britain's most senior judge and the leader of the Supreme Court, reported judges voted 8-3 to reject the Government's appeal. Theresa May repeatedly said she would trigger the EU divorce clause by the end of March but she will now have to seek permission from MPs to kick-start the process of leaving. However, the majority of lawmakers stated they would not stop the block the breakup process, which was supported by 52% of Britons. The Brexit Secretary David Davis said the Government is planning to introduce a fast-track Bill in Parliament to begin the process of leaving the EU within next few days, adding that MPs are expected to vote on the legislation as early as next week.
Separately, the Office for National Statistics reported British public sector borrowing dropped to a seasonally adjusted 6.4 billion pounds in December, slightly below analysts' expectations for 6.7 billion pounds. In the meantime, the November figure was revised down from 12.2 billion pounds to 10.8 billion pounds.
US Services PMI, Initial Jobless Claims and New Home Sales
Today, since the UK GDP data has already been release, focus turns to the US fundamentals, such as the Markit Services PMI. The Services PMI captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the Services PMI is an important indicator of the overall economic condition in the US. Another event will be the Initial Jobless Claims, even though they have a limited impact on the exchange rates, they still are an important sign of the US employment situation. 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 on the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Finally, the US 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 sets eye on 1.27
The Sterling surprised with its performance on Wednesday, having successfully climbed over the 1.26 major level, thus, taking another significant step closer to the main target. Another positive development would allow the GBP/USD pair to reach this target, namely the resistance cluster around 1.2675, represented by the 23.60% Fibo, the monthly R1 and the weekly R2, now also bolstered by the upper Bollinger band. Technically, the Pound should encounter sufficient resistance here in order to reverse polarity, but according to technical indicators the Cable is to keep edging higher, meaning the given supply area could be pierced.
Daily chart
On the hourly char the Cable is seen remaining in a bullish trend. A retest of the trend-line is expected before further gains occur. However, the up-trend is unlikely to last for the third consecutive week, with a breakout expected to occur mid-week.
Hourly chart
Traders mostly bullish
Once again bullish market sentiment weakened, having fallen from 62 to 61%. The share of sell orders returned to its Tuesday's level of 54%.
A slightly less optimistic situation is observed elsewhere. For example, 55% of positions open at OANDA are currently long. This is more than the share of shorts (45%), barely sufficient for the sentiment to be called bullish. However, sentiment at Saxo Bank turned bearish, with 52% of traders being short and 48% being long 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 53% of survey participants believe so. While the current price is around 1.23, the average forecast for April 26 is 1.2221. However, the 1.14-1.16 interval is now the most popular one, having 19% of the votes, while on the second place is the 1.18-1.20 price range, with 13% of poll participants choosing it. Furthermore, the 1.20-1.22 interval was chosen by 11% of the voters.