- 59% of pending orders in the 100-pip range are to SELL
- 54% of traders are bearish on the Sterling (-1%)
- Strong support circa 1.3860
- Upcoming events: UK Public Sector Net Borrowing, WEF Annual Meetings
The British Pound fluctuated against the US Dollar after the UK retail sales report, falling initially by 4 base points to the 1.3916 mark. The GBP/USD exchange rate briefly touched the 1.3945 level remaining in the bearish trend.
Britain's shop sales depreciated by more than anticipated in December, confirming the weakest yearly growth in retail in four years, as consumer spending remained limited due to Brexit-hit prices. The Office for National Statistics revealed that the volume of retail sales fell 1.5% from November, reversing a 1.0% increase registered in the prior month. Meanwhile, the Bank of England anticipated the squeeze on consumers to ease this year, as inflation calms down and pay growth accelerates.
Muted session
The British Office for National Statistics is to release its Public Sector Net Borrowing for the month of December at 0930GMT. Meanwhile, the World Economic Forum is starting today in Davos.
GBP/USD breaches three-month channel
The Pound was driven by strong upside momentum against the Greenback on Monday, thus closing the session with a 94-pip gain. As a result, the pair breached the combined support of the weekly R1 and the upper boundary of a three-month ascending channel near 1.3960.
Shorter-term patterns, however, demonstrate that the strong movement north apparent during the previous week is starting to allay. Thus, the Sterling moving above the 1.3960 level might actually be a false breakout.
Technical indicators suggest that the pair could trade lower within the following days. This session, however, might still mark a slight up-move towards the weekly R2 at 1.4061. Subsequently, the rate is expected to edge lower towards the 55– and 100-hour SMAs circa 1.39.
Hourly chart
The Sterling managed to close the session at 1.3989. However, bulls failed to push above this six-month high. The pair was testing the weekly R1 and gradually approaching the previously-breached channel on Tuesday morning.
Daily technical indicators flash bearish signals, suggesting that this week might bring a bearish correction.
Daily chart
The SWFX sentiment remains bearish today, as 54% of traders are holding short positions (-1%). Meanwhile, pending orders stand at equilibrium, compared to 59% to sell on Monday.
The bearish sentiment of OANDA traders has increased by three percentage points with 61% short positions. Saxo Bank clients share the same sentiment with 67% short positions for the second consecutive session.
Spreads (avg, pip) / Trading volume / Volatility