- 59% of all pending orders are to buy the Pound
- 60% of all open positions are long
- Gains should be capped around 1.2903
- Significant support rests circa 1.2740
-
Upcoming Events: BOE Governor Carney's speech
The Bank of England Governor Mark Carney held a press conference about the Financial Stability Report in London on Tuesday. Carney said that the Financial Policy Committee would increase the countercyclical capital buffer rate to 0.5% from 0%. Apart from that, the FPC expects to raise the rate to 1% at its November meeting. The Bank acknowledged the UK's economic performance had been markedly stronger than its gloomy predictions. However, the BoE noted that risk levels had been varying from sector to sector and remained quite high in the consumer credit market.
Carney said that consumers should carefully identify the rationale for purchasing property or investing in a business. Starting from July, the BoE will start tightening rules on unsecured lending in order to slow lending growth among people who are unable to meet loan obligations. Furthermore, the Bank pointed to the high private-sector borrowing in China, which can potentially cause problems to British banks. Policymakers cited the country's exit from the EU as a risk to the economy, adding that the Bank was preparing for all scenarios post-Brexit.
Watch More: Dukascopy TV
ECB Forum in focus
Today' s main focus is the European Central Bank Forum which is set to have a panel discussion at 1330 GMT with participation of four central bank governors, including BOE's Carney.
Read More: Fundamental Analysis
GBP/USD mildly bearish on Wednesday
The US Dollar's continuous weakness resulted in GBP/USD surging up to a three-week high at 1.2828 on Tuesday. Subsequently, the price was not able to overcome the 1.2820 mark and has since traded below the given level. Daily trading indicators signal that there is still some upside potential up to the monthly PP at 1.2903. However, the rate's minor motion sideways indicates that bears may prevail in this session. In addition, a retracement from the upper channel boundary is still expected. Nevertheless, this scenario might occur only within the following two days if strong downside risks do not set the British currency for a plunge. A more likely lower limit for this session might be the 38.2% Fibo or the monthly S1 at 1.2770 and 1.2758, accordingly.
Hourly chart
GBP/USD is stranded between the 55- and 20-day SMAs in the 1.2841/1.2789 area. This range is expected to be breached to the downside, reinforced by bearish technical indicators. The next support of importance is the monthly S1 at 1.2758 which may function as a stopping point for the Pound.Daily chart
Read More: Technical Analysis/
Bearish sentiment prevails
SWFX traders have become increasingly bullish on the pair, as 60% of all open positions are long (54% on Tuesday). Meanwhile, 59% of set up orders are to buy the Pound.
On the contrary, traders at Saxo Bank are bearish on the pair, with 61% of traders holding short positions (58% previously). In addition, OANDA clients are likewise bearish with 59% of open positions being short.
Spreads (avg, pip) / Trading volume / Volatility
Traders slightly bullish
© Dukascopy Bank SAThe majority of traders 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 1.2820, while the average forecast for September 26 is 1.278 (1.2819 on Tuesday). The 1.24-1.26 range still remains the most popular price interval, having 20% 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.