During the last month, Britain's officials fuelled expectations that the Central Bank was likely to raise interest rates, though Thursday's reports showed it unchanged, resulting in the immediate fall in the GBP/USD currency pair. The Sterling fell against the US Dollar by 0.44% to be seen trading at 1.3180 as the Bank of England kept its dovish stance. The Central Bank's key rate remained at a record-low level of 0.25% amid anticipations for subdued growth of wages and diminishing forecasts for economic expansion, as companies showed more cautious approach to investments. A weaker Pound, though, could push inflation higher to eventually reach 3% in October. Still, experts saw possibility of a rate hike only along with first signs of sustainable expansion.
The British Pound depreciated against the US Dollar, as the data revealed that the UK construction industry grew at the slowest pace in 11 months in July. After the report, the GDP/USD exchange rate fell by 0.06% to be seen trading at 1.3234. Markit revealed that its PMI for Britain's construction sector dropped to 51.5 in July, below forecasts for a modest decline to 54.5 points. The report showed a decrease in commercial development and weaker house building, which reflected a slowdown in the property market. Moreover, post-election uncertainties and unclarity surrounding the country's economic outlook resulted in subdued demand for construction, while firms revealed less confidence about the future of the sector.
US earnings and employment data
Pound loses 0.9% against Greenback
In line with expectations, an announcement of the UK Official Bank Rate and the following Governor Carney's press-conference have heavily affected value of the given currency pair. Namely, the 94-pip depreciation of the Pound has pushed the rate out of a weekly ascending channel. The fall continued until the pair found support in the face of the 200-hour SMA near 1.3130. Shortly after that the Sterling tried to restore some of the lost positions, but failed to climb above the 1.3144 level. Today it is expected to continue to climb to the top. However, even if succeeds to overcome the above resistance, the surge should be limited by a combination of the 55- and 100-hour SMAs as well as the weekly R1. If it fails, the slide most likely will be stopped by the weekly or monthly PP near 1.3090.
Bullish sentiment remains in force
Today the number of open long positions increased a little bit to 57%, compared to 56.70% yesterday. In the meantime, 56% of pending orders are to buy the Pound.
In the meantime, traders at Saxo Bank remain bearish on the pair, with 66.50% of traders holding short positions (-2.5%). OANDA clients are similarly bearish on the pair, as 57% of all open positions are short (+2%).
Spreads (avg, pip) / Trading volume / Volatility