- 71% of pending orders in the 100-pip range are to SELL
- 53% of traders are bearish on the Sterling (-1%)
- Strong resistance circa 1.3930
- Upcoming events: US Building Permits, US Housing Starts, Philly Fed Manufacturing Index, US Unemployment Claims
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.
US Building Permits
The only fundamentals affecting the GBP/USD currency pair today is scheduled from the United States at 1330GMT, namely, Building Permits and Housing Starts for December, the weekly Unemployment Claims and the Federal Reserve Bank of Philadelphia's Manufacturing Index.
GBP/USD erases previous gains
The Sterling spent the first half of Wednesday's trading session with no significant changes against the US Dollar due to the support of the 55-hour SMA. Subsequently, bulls managed to push the rate towards the weekly R2 at 1.3932; however, these gains had already been lost by Thursday morning.
It seems that the bullish sentiment that guided the Pound last week has allayed. This assumption could point to soon prevalence of bears. Thus, it is likely that the pair continues pushing lower in this session. This attempt could be hindered by the 55– and 100-hour SMAs circa 1.3775.
Even if this area is not breached, the Pound should not surpass the monthly R3 which is located at 1.3864.
Hourly chart
The Pound demonstrated high volatility against the US Dollar on Wednesday. The given session ended with limited gains even despite strong upside momentum mid-session.
This strong up-move has since allayed slightly below the 61.8% Fibo retracement and the monthly R3 at 1.3864. This suggests that bulls might be reluctant to move past the 1.3850 mark, thus confirming the bearish scenario described on the hourly time-frame.
Daily chart
The SWFX sentiment remains bearish in this session, as 53% of traders are holding short positions (-1%). In addition, 55% of pending orders are now to sell the Sterling.
The bearish sentiment of OANDA traders has decreased to 57% short positions (-2%). Saxo Bank clients share the same sentiment with 65% short positions (+1%).
Spreads (avg, pip) / Trading volume / Volatility