- 61% of pending orders in the 100-pip range are to SELL
- 54% of traders are bearish on the Sterling
- Strong support cluster circa 1.37
- Upcoming events: MPC Member Saunders and FOMC Member Mester to speak, US Capacity Utilisation Rate, US Industrial Production m/m
The Sterling weakened against the US Dollar on the row of mixed economic data releases for Britain on Tuesday. The GBP/USD currency pair lost 22 base points or 0.16% to fall slightly ahead of entering the resistance zone near the 1.3825 level.
The UK inflation eased slightly from its post-Brexit record high in December, official report revealed, indicating that the financial squeeze on households is likely to weaken. Britain's consumer price inflation declined to a yearly rate of 3.0% in December from almost six-year high registered in the previous month. The BoE anticipated inflation to fall gradually over the next two to three years to the 2% target, while many economists revealed expectations for a faster decline in a year.
Uneventful day
Despite several fundamentals scheduled for this session, these events are unlikely to affect the market significantly due to their muted influence. This session will start with the External BOE MPC Member Michael Saunders who is set to speak at the Financial Intermediary and Broker Association inaugural conference and 1145GMT. In addition, the President of the Federal Reserve Bank of Cleveland Loretta Mester is to speak about monetary policy communication at Rutgers University at 2130GMT.
Meanwhile, the Federal Reserve will likewise release two sets of data at 1415GMT, namely the US Capacity Utilisation Rate and the Industrial Production for the month of December.
GBP/USD breaches short-term channel
Downside risks prevailed during the first half of Tuesday. However, the 55-hour SMA proved to be an unbreakable resistance that pressured the rate back north. Similarly to EUR/USD, the Pound was stranded between the weekly R1 and the 55-hour SMA at 1.3823 and 1.3781, respectively.
Meanwhile, the pair breaching a short-term ascending channel suggests that bears might eventually take the upper hand in the market. This scenario, however, depends on the rate's ability to breach the aforementioned moving average. A subsequent fall should not exceed the 100-hour SMA located near the 1.37 mark.
Even though an upward breakout should not be discarded, more weight is put on the bearish scenario, especially if the northern side is likewise reinforced by the monthly R3.
Hourly chart
In case the pair closes this session in the red area, it might confirm the beginning of a minor down-trend towards the monthly R2 at 1.3707.
Daily chart
The SWFX sentiment remains bearish in this session, as 54% of traders are holding short positions. In addition, 53% of pending orders are to buy the Sterling (-1%).
OANDA traders have not changed their bearish sentiment for the second consecutive session with 59% short positions. Saxo Bank clients share the same sentiment with 64% short positions.
Spreads (avg, pip) / Trading volume / Volatility