- 52% of pending orders in the 100-pip range are to SELL
- 58% of traders are bullish on the Pound (+1%)
- Important support lies circa 1.3130
- Upcoming events: UK Average Earnings Index 3m/y, UK Claimant Count Change, UK Unemployment Rate, MPC Member Broadbent to speak, US CPI and Core CPI m/m, Retail Sales and Core Retail Sales m/m, US Empire State Manufacturing Index
The Sterling fell against the US Dollar on disappoint UK consumer inflation report. The GBP/USD currency pair dropped 32 base points or 0.24% to make a double touch of the intraday low close to the 1.3090 mark. On Wednesday motning the pair was seen trading in the 1.3140 area, awaiting the other closely watched report on average earnings.
Britain's consumer price growth held steady at 3.0% in October, while analysts' forecasted it to expand 3.1% in the reported month. An unexpectedly steady inflation raised questions on how fast the Bank of England is likely to raise key interest rates. Meanwhile, the Bank argued that Brexit would damage the UK ability to expand as fast as previously without bearing excess inflation.
Abundance of fundamentals
Several events have the potential to shake GBP/USD in this session. First, the British Office of National Statistics is to publish the UK Average Earnings Index and Unemployment Rate for September and the Claimant Count Change for October at 0930GMT.
In addition, the BOE Deputy Governor Ben Broadbent is due to speak about the impact of EU withdrawal on UK interest rates at the London School of Economics at 1300GMT.
Meanwhile, the US is to release its (Core) CPI and (Core) Retail Sales for October, as well as the Empire State Manufacturing Index at 1330GMT.
GBP/USD prepares for double data release
A release of latest update on the British inflation sent the cable to test support zone near the weekly S1 at 1.3090. However, by the end of the day the Pound managed to recover and returned back to the 50% Fibonacci retracement level at 1.3180.
Due to support formed by a combination of the 55-, 100- and 200-hour SMAs the pair is expected to spend first half of this trading session between the 1.3180 and 1.3125 marks.
These barriers have a good chance to withhold the rate even during release of the UK earnings data. However, the further movement of the cable is difficult to project, as it will heavily depend on release of the US inflation and retail sales data.
Hourly chart
GBP/USD has been trading near the lower boundary of the junior channel for the last two weeks. Even though the rate showed some signs of a possible decrease in price, current technical indicators are in a favour of appreciation.
If looking in the short term, the Sterling found resistance at the 100-hour SMA circa 1.3120 for the second consecutive session. As a result, the pair remains stranded between this line and the 55-hour SMA located at 1.3240. The weekly PP at 1.3160 might likewise provide support along the way.
Daily chart
Bulls strengthen their positions
The bullish SWFX market sentiment has slightly weakened on Wednesday, as it is currently standing at 56% (-1%). In addition, 52% of pending orders are to buy the Sterling.
OANDA traders are bullish in this session, as 56% of open positions are long (+3%). Meanwhile, Saxo Bank clients have turned bearish on the pair, as 53% of their positions are short (unchanged from Tuesday).