- 51% of all pending orders are to buy the Pound
- 57% of all open positions are long
- Gains should be capped around 1.2758
- Significant support rests circa 1.2667
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Upcoming Events: US Flash Services PMI, US New Home Sales, FOMC Member Powell Speaks
The number of Americans filing for unemployment benefits rose slightly last week, official figures revealed on Thursday. The US Department of Labour reported that initial jobless claims rose to 241K in the week ended June 16, following the preceding week's upwardly revised 238K but meeting market analysts' expectations. Initial claims remained below the 300K level for the 120th week, the longest streak since 1973. The four-week moving average of initial jobless claims climbed 1.5K to 244,750 last week, the highest level since April.
Apart from that, Thursday's data also showed that the number of people continuing to receive jobless benefits rose 8K to 1.94M in the week ended June 10. Continuous claims remained below the 2M level for 10 consecutive weeks, pointing to the strong labour market trends. According to some analysts, the US labour market is at or close to full employment, with the unemployment rate at a 16-year low of 4.3%. If the jobs market continues to perform strong, the Fed will likely speed up interest rate hikes. However, to make the next rate hike policymakers will also focus their attention on inflation growth.
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No strong market shakers scheduled for today
Friday's economic calendar is rather empty for both currencies. However, there are still four data sets planned in this trading session – all from the US. The country is to publish Flash Manufacturing PMI and Flash Services PMI at 1345 GMT and 15 minutes later – New Home Sales. Today's calendar will be finalised with FOMC Member Powell's speech at 18:15 GMT.
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GBP/USD points to weakness
During the last trading session, the Sterling demonstrated solid appreciation against the US Dollar, crossing the 20– and 100-hour SMAS along the way. The pair has approached a short-term down-trend near the 1.2710 mark, reinforced by the 200-hour SMA and the 23.6% Fibo at 1.2717 and 1.2720, respectively. The pair has been trading below the given SMA for most of the down-trend, suggesting that this may serve as a stopping point in this session, as well. Technical indicators are generally bearish, demonstrating that the down-trend may, in turn, be respected. Thus, it is likely that the Pound tests the 1.2717 level prior to edging lower mid-day. The subsequent fall might be stopped by the 55-day SMA located circa 1.2660. On the contrary, an upward breakout would put the monthly S1 at 1.2758 to the test.
Hourly chart
The daily chart demonstrates that the Pound is trading between two levels of significance, namely, the monthly S1 and S2 at 1.2758 and 1.2625, respectively. Even though the pair is showing strong upside momentum, a breakout from the former is not expected in this trading session.Daily chart
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Sentiment shows mixed results
SWFX market sentiment has diminished slightly in this session; however, 57% of all open positions are still long. Meanwhile, 54% of all pending orders are to buy the British Pound.
A less optimistic situation is observed by other sentiment indicators. For instance, sentiment at OANDA has increased its bearish readings, as 58% of all open positions are short. The same situation is likewise apparent at Saxo Bank where trader sentiment is bearish with 57% short positions.
Spreads (avg, pip) / Trading volume / Volatility
Traders predict further weakness
© Dukascopy Bank SATraders believe the Cable is to fall below the 1.28 mark three months from now, as 50% of survey participants share this belief. While the current price is around 1.2730, the average forecast for September 23 is 1.2829. The 1.24-1.26 range is now the most popular price interval, having 19% of the votes, while three other price levels, namely, 1.22, 1.32-1.34 and 1.34-1.36, follow closely with 14%.