- 52% of all orders are to buy the Pound
- 52% of all open positions are short
- Immediate resistance is around 1.30
- The closest support rests circa 1.2930
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Upcoming Events: UK GDP Second Estimate, US Initial Jobless Claims, US Goods Trade Balance
US crude oil inventories dropped for the seventh consecutive time last week, official figures revealed on Wednesday. The Energy Information Administration reported that US crude stockpiles fell 4.4M barrels in the week ended May 19, following the preceding week's decrease of 1.8M barrels and surpassing expectations for a 2.4M barrel decline. Thus, inventories hit 516.3M barrels, the lowest level since mid-February, suggesting that the OPEC production cut deal began working. The data came out a day before the OPEC meeting in Vienna, Austria. Analysts expect that OPEC and non-OPEC countries will likely extend the deal for six more months. Refinery production climbed 159K barrels per day to 17.281M bpd during the reported week, whereas the refinery utilisation rate advanced 0.1% to 93.5%.
The four-week average of crude exports rose 30% to 4.7M bpd last week, compared to the same period a year ago. The EIA also reported that inventories at the Cushing, Oklahoma, dropped 741K barrels last week. Oil prices rose shortly after the releases, with WTI futures hitting $51.88 per barrel, the highest since April 19.
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Upcoming events: UK GDP Second Estimate, US Initial Jobless Claims
Thursday does not bring a lot of data to focus on, but attention could still be paid to the UK GDP Second Estimate. GDP shows the monetary value of all the goods, services and structures produced within a country in a given period of time. GDP includes consumption, government purchases, investment, and the trade balance. It is a gross measure of market activity, because it indicates the pace at which a country's economy is growing or decreasing. No changes or surprises are expected in today's reading, therefore, the impact is likely to be extremely limited. Additionally, the US Initial Jobless claims are due, same as every Thursday. No major changes are expected there either. As a result, investors' mood is likely to be driven by other factors, such as the OPEC meeting today.
Read More: Fundamental Analysis
GBP/USD risks ending consolidation
Even though the Cable failed to behave in accordance with expectations yesterday, the consolidation trend still remained intact. Overall, the situation did not change since Wednesday, as the Pound is still required to experience another leg down in order for the trend to continue its existence. The same supports and resistance are in play and technical indicators keep suggesting the GBP/USD pair is to appreciate, meaning that a bullish development is also more than possible, which would, this time, fully break the consolidation trend. However, solid gains beyond 1.3030 are also doubtful due to the absence of a strong market mover.
Daily chart
The 200-hour SMA finally gave in, allowing the GBP/USD pair to retest the channel's support line, thus, confirming it once more. Consequently, the hourly charts suggests that the Cable should keep rebounding, as it should have received sufficient momentum when it retest the channel's support line yesterday. At this point, a surge beyond 1.30 is a matter of time, with the 1.31 major level being the main target now.Hourly chart
Read More: Technical Analysis
Bearish sentiment still prevails
There are 52% of traders being short the Sterling against the US Dollar today, while the portion of buy orders inched down from 56 to 52% in the last 24 hours.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 61% of all open positions are short and the remaining 39% are long. Meanwhile, sentiment at Saxo Bank is also bearish, with 62% of traders now being short and the other 38% - long on the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound recovering
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.30 major level, as 62% of survey participants share this belief. While the current price is around 1.30, the average forecast for August 25 is 1.3056. The 1.34-1.36 range is now the most popular price interval, having 20% of the votes, while on the second place are the 1.20-1.22 and the 1.32-1.34 intervals, both with 15% of the voters choosing them.