- 52% of all pending orders are to sell the Sterling
- 56% of traders are long the Pound
- Immediate resistance is at 1.2541
- The closest support is around 1.2490
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Upcoming events: US CPI and Core CPI, US Retail and Core Retail Sales
US producer prices dropped unexpectedly last month due to the lower cost of services and energy products. The Labour Department reported on Thursday that its Producer Price Index dropped 0.1% in March, following the preceding month's gain 0f 0.3% and falling behind analysts' expectations for a 0.0% reading. That marked the first decline since August 2016. On an annual basis, however, the PPI was up 2.3% last month, the largest gain since March 2012, compared to February's increase of 2.2%. The cost of services fell 0.1%, accounting for about 75% of the drop. The price of energy plunged 2.9%, with gasoline prices falling 8.3%. Back in February, energy prices were 0.6% up. Taking into account surging oil prices and Saudi Arabia's intentions to cut production, producer prices are set to rebound in the upcoming months.
Overall, inflation continues rising amid the US Dollar strength and stronger domestic demand, pleasing the Federal Reserve, which is expected to its interest rates in June. Thursday's data also showed that, excluding volatile items, producer prices were unchanged last month, after rising 0.3% in February, whereas analysts expected core prices to accelerate 0.2% in March. After the release, the US Dollar dropped markedly against other major currencies.
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US CPI and Retail Sales are today's market drivers
Friday brings inflation data, namely the US CPI and Core CPI. The CPI is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. As for the Core CPI, those volatile products, such as food and energy, are excluded from it in order to capture and accurate calculation. Another important event is due – the US Retail Sales. The Retail Sales measure the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. In Core Retail Sales the automobile sector is excluded.
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GBP/USD anchored around 1.25
On Thursday, the British currency suffered a relatively serious loss against the US Dollar, having almost completely erased Wednesday's gains. Nevertheless, this decline prolonged the bearish trend-line, while the immediate support, namely the weekly R1, managed to prevent the Cable from falling deeper, thus, causing trade to close above 1.25. No significant development is expected today, mostly due to Easter holidays. However, technical studies keep giving bullish signals, suggesting another leg up is possible. The down-trend is likely to keep the Sterling at bay, but another bearish development would somewhat confirm the Cable's short-term consolidation trend.
Daily chart
As was anticipated, the ascending channel pattern on the hourly chart was pierced to the downside yesterday, which confirmed the daily chart's down-trend. Gains appear to be holding above 1.25, but there is nothing present that could prevent the Cable from another decline today, at least on the hourly chart.- Hourly chart
Read More: Technical Analysis
Traders mostly bullish
Today 56% of traders are long the Pound (previously 54%), while 52% of all pending orders are to sell the Sterling, down from 55% yesterday.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains somewhat bearish, but there are still not that many more bears than bulls, namely 54% of all open positions are short and the remaining 46% are long. Meanwhile, sentiment at Saxo Bank once again improved over the day, with 55% of traders now being long and the other 45% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.22 major level, as 56% of survey participants believe so. While the current price is around 1.24, the average forecast for July 13 is 1.2444. The 1.18-1.20 range is now the most popular price interval, having 20% of the votes, while on the second place is the 1.20-1.22 price range, with 15% of poll participants choosing it. Furthermore, the 1.26-1.28 and the 1.30-1.32 intervals were each selected by 13% of the voters.