- 57% of all pending orders are to buy the Pound
- 61% of all open positions are long
- Possible upside limit rests at 1.3030
- Significant support rests circa 1.2922
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Upcoming Events: US ADP Non-Farm Employment Change, US Unemployment Claims, US Trade Balance, US ISM Non-Manufacturing PMI
Services sector activity in the UK fell more than expected in June amid rising uncertainty surrounding the Brexit negotiations. Markit reported on Wednesday that its Purchasing Managers' Index for Britain's services sector declined to 53.4 in June, compared to the preceding month's 53.8 points. The weaker-than-expected figures added to evidence that the country's economic expansion started to fade, following the disappointing PMI reports on the UK construction and manufacturing sector.
Moreover, survey showed that the amount of new orders grew at the slowest pace in nine months, while business confidence registered the second-weakest reading since December 2011. However, experts suggested that there were some gains, notably in business services and financial services, but in general, investment, exports and business spending failed to provide a sufficient boost to fully offset a slowdown in consumption. In contrast, the labour market registered its fastest pace of job creation in 14 months, while companies faced difficulties of recruiting new staff.
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Day full of fundamentals from US
The United States are to release various sets of data in this trading session. The series will start with ADP Non-Farm Employment Change at 1215 GMT. Subsequently, unemployment claims and trade balance are to be published at 1230 GMT. The last significant event is the ISM Non-Manufacturing PMI at 1400 GMT.
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GBP/USD finds support at weekly PP
After bouncing off the lower channel boundary, the Pound appreciated gradually against the US Dollar on Wednesday. Bulls pushed the rate through the upper channel boundary, the weekly PP and the 55 and 20-hour SMAs, adding to the overall bullish sentiment. Other technical indicators have likewise turned bullish, thus favouring further upward potential. Upside risks should prevail in this session; however, the scope of the given outcome is yet unclear. By and large, the Pound is likely to be supported by the 55-hour SMA. An immediate support to the upside is the 100-hour SMA near the 1.2960 mark. In case this level is surpassed, the upside target for today may be the June high at 1.3030, as no other resistance is located in between these levels.
Hourly chart
The Pound lacked momentum on the morning session, thus resulting in a relatively flat candle. The nearest support of importance is a cluster formed by the monthly PP and the 55-day SMA circa 1.2880. Resistance, however, is very distant, being located at the 1.3212 mark (38.2% Fibo).Daily chart
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Bearish sentiment prevails
Market sentiment is bullish on Thursday, as 61% of open positions are long (60% on Wednesday). Likewise, 57% of set up orders are to buy the Pound.
On the contrary, traders at Saxo Bank remain bearish on the Sterling, with 63% of traders holding short positions (unchanged from Wednesday). Moreover, 61% of OANDA clients hold short positions.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound falling
© Dukascopy Bank SAThe majority of traders believe that the Cable is to fall below the 1.28 mark three months from now, as 61% (+3%) of survey participants share this belief. The current spot price is around 1.2930, while the average forecast for October 6 is 1.2760 (1.2765 on Wednesday). The 1.24-1.26 range remains the most popular price interval, having 27% of the votes (+1%).