- 59% of pending orders in the 100-pip range are to SELL
- 53% of traders are bearish on the Sterling
- Gains could be capped near 1.40
- Upcoming events: UK CPI y/y, UK PPI Input y/y, UK RPI y/y, FOMC Member Master to speak
The US government posted a $49B budget surplus in the month of January, the Treasury Department stated on Monday. The report also showed that the US fiscal gap rose 11% to $175.7B in the four month period to January, compared to the same period a year ago.
The gap is anticipated to widen further as an aging population increases spending on retirement programs and healthcare. The proposed budget released on Monday revealed the deficit widening to $984B in 2019, assuming that Congress would adopt all of the President Trump's proposals, including cuts of spending.
British inflation in focus
All eyes in this trading session will be on the British Consumer Price Index, Producer Price Index and the Retail Price Index for the previous month to be released at 0930GMT. Meanwhile, the only notable fundamental event from the United States is a speech by the President of the Federal Reserve Bank of Cleveland Loretta Mester about the economic outlook and monetary policy at 1300GMT.
GBP/USD re-tests 1.39 area
Lack of fundamental events on Monday resulted in the Pound moving sideways against the US Dollar. The pair tried to push higher during the day; however, the strong resistance of the 55– and 100-hour SMAs restricted any advances. It is likely that the Pound tries to move past this resistance area once again in this session.
A possible bullish push could be provided by the British CPI data to be released at 0930GMT. In case this cluster is surpassed, the Pound is expected to appreciate up to the 1.40 mark where the 200-hour SMA and and the monthly PP are located. A further advance is unlikely, as the pair was unable to breach this psychological level last week.
Meanwhile, losses should be restricted by the weekly and monthly S1s near 1.37.
Hourly chart
As apparent on the daily chart, the Pound has breached the bottom boundary of the prevailing three-month channel down. This suggests that the British currency could continue its movement south down to the 55-day SMA near the 1.3660. This scenario is supported by technical indicators.
Daily chart
The bearish market sentiment has taken the upper hand in this session, as 53% of traders are holding short positions (-2%). In addition, 53% of pending orders are to sell the Pound (+1%).
The bearish sentiment of OANDA traders has weakened slightly to 55% of all open positions being short (-1%). Saxo Bank clients share the same sentiment with 55% short positions (-5%).
Spreads (avg, pip) / Trading volume / Volatility