- 54% of pending orders in the 100-pip range are to BUY
- 54% of traders are bullish on the Sterling (+1%)
- Strong resistance area circa 1.4180
- Upcoming events: UK Services PMI, US ISM Non-Manufacturing PMI
The British Pound weakened against the Greenback 12 base points or 0.09% on the construction PMI report, though the pair was affected more from the US side after the country's job market data was released.
The UK construction sector almost began the contraction for the first time in five months in January, as Brexit uncertainties cased some dry up in new orders. The Markit/CIPS reported that Britain's construction PMI declined to 50.2 in January, following a 52.2 gain in the prior month. Firms anticipated business to enhance later this year, though the outlook is likely to depend on how the Brexit negotiations go, with the UK PM Theresa May aiming to reach the deal with the European Union that would exclude new barriers to investment and trade.
UK Services PMI
Two fundamental events should be noted in this session, namely, the British Services PMI and the US Non-Manufacturing PMI for the month of January at 0930GMT and 1500GMT, respectively.
GBP/USD points to limited gains
Similarly to other major currencies which are trading against the US Dollar, downside risks were driving the Pound during the previous session. Thus, it was unable to re-test its 1,5-year high of 1.43.
The pair found support for at the 55-hour SMA for a brief period of time; however solid US fundamentals at 1330GMT resulted in a southern breakout of this moving average and eventually the longer-term SMAs, as well. In addition, the bottom boundary of the prevailing seven-week ascending channel also surrendered.
Technical indicators flash bullish signals. However, the expected appreciation is likely to be delayed or even stopped by the aforementioned SMAs in the 1.4170/1.4200 area.
In terms of support, the Pound is restricted by the monthly PP at 1.40.
Hourly chart
GBP/USD continues to trade near the 1.42 mark for the second consecutive week. This minor period of consolidation might finally point to a possible decline. Technical indicators are likewise supportive of this scenario. The nearest support is set by the monthly PP and the weekly S1 circa 1.40.
Daily chart
SWFX market sentiment remains bullish today, as 54% of traders are holding long positions, compared to 53% on the previous session. Meanwhile, 55% of pending orders are still to sell the Pound (+1%).
The bearish sentiment of OANDA traders has strengthened notably to 64% of all open positions being short (+6%). Saxo Bank clients share the same sentiment with 60% short positions (-4%).a
Spreads (avg, pip) / Trading volume / Volatility