- 65% of all pending orders are to buy the Pound
- 64% of all open positions are long
- Possible upside limit rests at 1.3030
- Significant support rests circa 1.2900
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Upcoming Events: US CPI m/m, US Core CPI m/m, US Core Retail Sales m/m, US Retail Sales m/m, US Industrial Production m/m, FOMC Member Kaplan Speaks, US Prelim UoM Consumer Sentiment
The US Producer Price Index for final demand nudged up 0.1% in June on the back of sustained increases in services cost that managed to offset plunging energy prices, data released by the Labour Department revealed on Thursday. The gain came in as a surprise, as the vast majority of analysts had predicted the index to stay unchanged, and suggested that a recent moderation in inflation was likely temporary. In 12 months through June, the PPI advanced 2.0%, down 0.4% from May's reading, as the energy-led spike was dropped out of the calculation.
Meanwhile, the Core Finished Goods PPI advanced a modest 0.1% over the reported period, missing economists' expectations for a 0.2% uptick and following the 0.3% surge registered in May. Year-on-year, the core PPI climbed 2.0% in June after rising 2.1% in the preceding month. In another report, the Labour Department said the number of Americans filing for unemployment benefits dropped 3K to a seasonally adjusted 247K in the week ended July 8.
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Busy day for USD traders
News agenda is relatively light for most major currencies except for the US Dollar. The United States are to release CPI and Retail Sales, including core readings, for the month of June at 1230GMT. Following weak retail sales in May, traders would like to see some signs of recovery. Furthermore, some additional data of intermediate importance are released afterwards, such as monthly industrial production and preliminary consumer sentiment by the University of Michigan at 1315GMT and 1400GMT, accordingly. The FOMC Member Robert Kaplan is set to speak about the Federal Reserve and monetary policy at the Centre for Economic Studies of the Private Sector in Mexico City at 1330GMT.
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GBP/USD bound between weekly PP and R1
Following a massive leap upwards on Thursday morning, GBP/USD returned to test the weekly PP at 1.2926. Despite various attempts, the Sterling failed to overcome this level and edge lower. The nearest resistance is formed by the weekly R1 at 1.2986. This level may be tested today, given the continuous support from the 20-hour SMA. The market in the morning session demonstrates lack of volatility. Thus, traders may be cautious prior to fundamentals from the US at 1230GMT. In case these data do not shake the market tremendously, it is likely that the pair remains between the weekly PP and R1 in the 1.2910/1.3000 range. Solid downside risks could likewise push the rate to a support cluster formed by the 55-, 100– and 200-hour SMAs circa 1.2900.
Hourly chart
GBP/USD continues its upward march for the third consecutive day; however, the previously-observed momentum has allayed. It is still likely that the Sterling closes in the green area but with limited gains. The closest resistance is formed by a down-trend near the 1.3030 mark, while support rests at 1.2880.Daily chart
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Market sentiment remains mixed
Market sentiment is bullish on Friday, as 64% of open positions are long (63% on Thursday). In addition, 65% of set up orders are to buy the Pound.
On the contrary, traders at Saxo Bank are bearish on the pair, with 66% of traders holding short positions (63% on Thursday). Moreover, 57% 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 may fall below the 1.28 mark three months from now, as 56% (-4%) of survey participants share this belief. The current spot price is around 1.2956, while the average forecast for October 14 is 1.2863 (1.2833 on Thursday). The 1.24-1.26 range remains the most popular price interval, having 31% of the votes (-1%).