- 57% of pending orders in a 100-pip range are to sell the pair
- 66% of traders are bullish on the Pound
- Significant support is located near the 1.2834 mark
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Upcoming Events: UK Average Earnings Index 3m/y, UK Claimant Count Change, UK Unemployment Rate, US Building Permits, US Housing Starts, FOMC Meeting Minutes
The GDP/USD fell sharply to the lowest level in four weeks, as the Britain's consumer price inflation report showed weaker than expected reading for July. The Pound retreated versus the US Dollar to the 1.2917 level, falling by 34 base points just after data were published.
The Office for National Statistics revealed that the UK Consumer Price Index marked a 2.6% yearly increase in July, equal to the previous month's gain, while analysts expected a climb of 2.7%. The inflation growth was dampened by lower oil prices, while the main support came from rising costs of clothing, food and utilities. The weaker-than-expected CPI figure reduced expectations for a higher inflation as well as the prospect of the Bank of England's interest rate hike.
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FOMC meeting minutes
Both the US and the UK are to release data that might affect significantly the market sentiment in this session. The day is set to start with the UK publishing Average Earnings Index, Claimant Count Change and Unemployment Rate at 0830GMT. Subsequently, the US Census Bureau is to report on the number of new residential building permits and housing starts at 1230GMT. Finally, the most expected event is the release of FOMC meeting minutes at 1800GMT.
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GBP/USD recovers slightly
Weak UK and strong US fundamentals on Tuesday resulted in a 108-pip fall of the GBP/USD exchange rate within six hours. As a result, the Pound fell down to the 1.2852 mark, but subsequently remained relatively stable slightly above 1.2860. Strongly bearish technical indicators suggest that a rebound should occur in this session. The nearest resistance is the weekly S2 at 1.2887; this level, however, should be breached without any hindrance. It is expected that the rate will trade in the 1.2900/40 area by Thursday morning if no surprising fundamentals or events shake the market tremendously. In case the Pound is pressured to the downside, losses should be limited circa 1.2840.
Hourly chart
Fundamental events made drastic changed to the given exchange rate on Tuesday, as they pushed the rate through the weekly S1, the 55-day SMA and also breached the ascending wedge along the way. It halted at the 100-hour SMA and demonstrated reluctance to edge even lower. Daily technical indicators support the Pound appreciating against the Greenback in this session, thus resuming its trade in the wedge.Daily chart
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Sentiment becomes neutral
The bullish sentiment has not changed on Tuesday, with 66% of open positions being long (-1%). Meanwhile, the number of pending orders is at equilibrium, currently standing at 50% to both sell and buy the Pound.
Meanwhile, traders at Saxo Bank are bearish on the pair, with 60% of traders holding short positions (+1%). The same bearish sentiment is shared by OANDA where 56% of open positions are likewise short (unchanged from Tuesday).
Spreads (avg, pip) / Trading volume / Volatility