- The share of buy orders surged from 50 to 57%
- The bull and the bear ratio is equal to one
- Immediate resistance is around 1.2830
- The closest support is at 1.2743
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Upcoming events: US Markit Manufacturing PMI, US Markit Services PMI, US Existing Home Sales
US manufacturing activity in the Mid-Atlantic region slowed markedly in April, official figures revealed on Thursday. The Philadelphia Federal Reserve reported its Manufacturing Index dropped to 22.0 in the reported month, following March's reading of 32.8 and falling behind analysts' expectations for a decrease to 25.6 points. Analysts stated that business optimism prompted by Donald Trump's win in the presidential election started to fade, putting downward pressure on business activity. Thursday's data also showed the New Orders Index fell to 27.4 from 38.6 points posted in March, the highest since December 1987.
Meanwhile, the six-month business outlook declined to 45.4 from 59.5 points registered in March, the strongest since August 2014. The Price Index dropped to 33.7 from 40.7 points posted in March, the highest since May 2011. On the positive side, the Employment Index rose to 19.9, the strongest since May 2011. Manufacturers also said that they would increase capital spending this year due to expected higher sales. Furthermore, 36.7 of the respondents said that capital spending would take place in the first half of the year. Other data release on Thursday showed initial jobless claims climbed 10,000 to 244,000 last week.
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US Existing Home Sales, Manufacturing and Services PMIs
Among important economic data releases today are the US Manufacturing and Services PMIs. The US Markit Manufacturing PMI captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in the US. As for the Services PMI, it captures business condition in the services sector. It also dominates a large part of total GDP and, thus, is an important indicator of the overall economic condition in the US. Finally, some attention could be turned to the US Existing Home Sales, as they provide an estimated value of housing market conditions. The housing market is considered to be a sensitive factor to the US economy, therefore, it generates some volatility for the USD.
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GBP/USD in orbit around 1.28
A failure to edge lower on Thursday suggested that the Cable has entered a period of consolidation and is likely to remain within its current trading range today, namely between 1.2750 and 1.29. From a broad technical perspective, another rally is unlikely, due to the weekly R3 and the upper Bollinger band forming resistance just above today's opening price, while the nearest support rests only at 1.2743, represented by the monthly R1. Furthermore, the GBP/USD pair appears to be gravitating towards the 1.28 mark, which also implies another leg down today is more probable. Meanwhile, technical indicators are giving mixed signals in the daily timeframe.
Daily chart
The hourly chart somewhat confirms the outlook of the daily one, as the consolidation period is shown clearer there. The current trend is expected to end by the end of next week, unless a political event, for example the French presidential election results on Sunday, triggers a sharp movement in either direction. The up-trend is also expected to be retested if the trend is preserved.Hourly chart
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Traders are equally divided
For the fourth day in a row the bull and the bear ratio remains equal to one. At the same time, the share of buy orders surged from 50 to 57%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 58% of all open positions are short and the remaining 42% are long. Meanwhile, sentiment at Saxo Bank worsened again over the day, with 55% of traders now being short and the other 45% being long 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 1.26 major level, as 56% of survey participants believe so. While the current price is around 1.28, the average forecast for July 21 is 1.262. The 1.28-1.30 and the 1.30-1.32 ranges are now the most popular price intervals, both having 16% of the votes, while on the second place is the 1.18-1.20 price range, with 14% of poll participants choosing it. Furthermore, the 1.20-1.22 interval was selected by 12% of the voters.