- 55% of pending orders in 100-pip range are to sell
- 63% of traders are bullish on the pair
- Gains could be capped near 1.31
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Upcoming Events: UK Preliminary GDP q/q, US New Home Sales, FOMC Statement, US Federal Funds Rate
The stronger-than-expected UK retail sales report failed to support the British Pound, as the gain was thought to be related to temporary warm weather effects. At the moment of data release, the Sterling rose 0.20% against the US Dollar to 1.3018. According to forecasts, Britain's retail sales were set to increase just 0.4% in June, but the release beat expectations with a 0.6% rise for the month. The higher volume of sales was supported by solid growth in clothing sales, which offset declines in fuel and food sales. Despite the uptick, the release is unlikely to convince the Bank of England to consider interest rate hike in the near term.
Britain's inflation fell unexpectedly in June from a four-year high reached in the previous month. The Office of National Statistics reported that the country's Consumer Price Index dropped 2.6% year-over-year, missing expectations for an unchanged reading of 2.9%, while the monthly rate slipped from 0.3% to 0.2% in the in June. The Core CPI, which excludes volatile items such as food and fuel, registered a weaker-than-expected reading of 2.4%, following May's 2.6% figure. The surprise fall, mainly driven by lower prices of oil and certain recreational and cultural goods, was partially offset by a rise in prices of furnishings and furniture. The strong decrease in the value of the British Pound after Brexit raised costs of imported goods, suggesting that inflation would show at least 3% pace of growth this year.
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Possible market shakers released today
This trading session comes with two data sets that may shake the market, namely, the British preliminary GDP for the second quarter of 2017 and a FOMC Statement at 0830GMT and 1800GMT, respectively. Likewise, the US is to publish data of intermediate importance – New Home Sales at 1400GMT and Federal Funds Rate at 1800GMT.
Read More: Fundamental Analysis
GBP/USD awaits fundamentals
The Pound was relatively steady on Tuesday morning, being supported by the weekly PP and the 55– and 200-hour SMAs circa 1.3015. However, this stable equilibrium changed mid-session when the rate shot up near the 1.3080 mark. This upward motion was not sustainable, as the price was pressured back to the aforementioned levels. By and large, the Sterling continues to move in an up-trend. Daily technical indicators suggest that it should trade higher in respect to Wednesday morning, trying to reach the weekly R1 at 1.3104. However, some minor depreciation may still occur. In case the rate breaches the trend-line, a fall down to the bottom wedge boundary is expected. Nevertheless, two sets of important fundamentals are to be released today.
Hourly chart
As expected, GBP/USD closed Tuesday's session almost at equilibrium, even despite bulls managing to push the rate up to the 1.3080 mark mid-session. The same situation is occurring today, as well. However, this low volatility may be explained by the fact that traders are awaiting fundamentals to decide on the pair's possible direction. The nearest resistance is provided by the upper channel line circa 1.3120, while support is set by the 20-day SMA at 1.2976.Daily chart
Read More: Technical Analysis/
Traders get more cautious
The bullish market sentiment has been gradually decreasing in strength, as 63% of open positions are long (65% on Tuesday). In addition, 51% of pending orders are to buy the Sterling.
In contrast, traders at Saxo Bank are bearish on the pair, with 61% of traders holding short positions (64% on Tuesday). Meanwhile, OANDA has turned slightly bearish once again, as the number of short positions of its clients is 51%.
Spreads (avg, pip) / Trading volume / Volatility