- 54% of all pending orders are to buy the Pound
- 54% of all open positions are long
- Gains should be capped around 1.2758
- Significant support rests circa 1.2716
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Upcoming Events: BOE Financial Stability Report, BOE Carney Speaks, US CB Consumer Confidence, Fed Chair Yellen Speaks
Orders for US-made durable goods dropped more than expected last month, pointing to a slowdown in the manufacturing sector. The Commerce Department reported on Monday that durable goods orders fell 1.1% in May, following the preceding month's downwardly revised drop of 0.8% and falling behind expectations for a 0.5% decline.
In the meantime, core durable goods orders rose just 0.1% last month after dropping 0.5% in April, whereas analysts anticipated an increase of 0.4% during the reported month. Monday's data combined with the prior week's retail sales and inflation figures suggested that the economy failed to regain positive momentum in the June quarter despite the recent sharp drop in the jobless rate. Back in the Q1, the US economy expanded at an annualised 1.2% pace. Yesterday's data also showed that orders for machinery climbed 0.6%, while shipments dropped 0.3%. Orders for civilian aircraft dropped 11.7%, whereas orders for defence aircraft and parts plunged 30.8%. Orders for motor vehicles and parts advanced 1.2% last month.
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Economic calendar full of important events for both currencies
The economic calendar for this trading session is full of fundamental events coming from the United Kingdom and the US. In the morning, the Bank of England is to publish Financial Stability Report at 0930GMT, as well as BOE's Governor Carney is to speak at 1000GMT. Subsequently, the US is to release data on consumer confidence at 1400 GMT. However, the most influential event for the US Dollar today is certainly the Fed Chair Yellen's speech at 1700GMT.
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GBP/USD waits fundamentals
On Monday, the expected upside potential up to the 1.2770 mark was halted by the monthly S1 at 1.2758 which intersected with the upper channel line. Subsequently, the price dropped down to the weekly PP at 1.2708 in response to fundamentals, but managed to recover some losses, thus returning above the 200-hour SMA. In this trading session, the Pound crossed the 55-hour SMA from below and continued a minor surge up to 1.2740. Technical indicators remain bullish, thus a continuous surge is likely to occur in the upcoming hours, setting either the aforementioned S1 or the 38.2% Fibo at 1.2770 as possible upside targets. In general, the pair is not expected to fall below the 200-hour SMA. Today, the economic calendar is full of important fundamental events, thus the rate should respond accordingly.
Hourly chart
Not being able to overcome the monthly S1 at 1.2758, the Pound appreciated against the US dollar on Monday. It is expected that the given level may be tested once more, however unlikely to be breached. The immediate support is provided by the 23.6% Fibo and the 100-hour SMA at 1.2673 and 1.2642, respectively.Daily chart
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Bearish sentiment prevails
SWFX trader sentiment has not changed since yesterday, as 54% of all open positions remain to be long. Meanwhile, 54% of set up orders are to buy the British Pound.
Traders at Saxo Bank have turned bearish on the pair, with 58% of traders holding short positions. In addition, the same situation is apparent at OANDA where 60% of open positions are short (unchanged from Monday).
Spreads (avg, pip) / Trading volume / Volatility
Traders slightly bullish
© Dukascopy Bank SATraders believe that the Cable is to fall below the 1.28 mark three months from now, as 53% of survey participants share this belief. The current spot price is around 1.2734, while the average forecast for September 26 is 1.2819 (1.2819 on Monday). The 1.24-1.26 range still remains as the most popular price interval, having 19% of the votes. Moreover, three price ranges, t.i. <1.22, 1.22/24 and 1.32/34, are the second most frequent answer, as 14% of voters chose each of this category.