- Pending orders in the 100-pip range are at equilibrium
- 56% of traders are bearish on the Sterling (+4%)
- The nearest significant support is located at 1.3930
- Upcoming events: UK Retail Sales m/m, US Building Permits, US Housing Starts, US Import Prices m/m, US Preliminary UoM Consumer Sentiment
The Labour Department revealed that the US Producer Price Index climbed 0.4% in January, as forecasted.
Data backed-up its growth rate with strong increase in healthcare and gasoline prices, which moved up 0.7% and 7.1%, respectively. The PPI report fuelled expectations that price growth would accelerate in 2018 even with weaker correlation with inflation of consumer prices. Inflation is likely to be lifted towards the Fed's 2% target, owing to tightening job market, weak US Dollar, as well as larger government spending and tax reform.
US Building Permits
Friday's trading session will start with the British Retail Sales for January at 0930GMT.
The United States is to release three sets of data at 1330GMT, namely, the Building Permits, Housing Starts and Import Prices for the same period, while the University of Michigan is going to publish its Consumer Sentiment at 1500GMT.
GBP/USD gains on weaker US Dollar
The Sterling continues to advance against the US Dollar for the second consecutive day, driven by weaker US Dollar in the global market. The rate hindered slightly near the weekly R1 at 1.4065 on Thursday, but nevertheless gained the necessary momentum to reach a new two-week high of 1.4150 this morning.
It seems that the Pound might be due for further gains, especially if no resistance is limiting it until the 1.43 mark where the weekly R2 and the highest level since the Brexit vote are located.
This advance, however, might come after a brief correction southwards. A possible point of reversal could be the monthly PP and the 55-hour SMA at 1.40, while a strong bearish sentiment should send the rate for a test of the 100– and 200-hour SMAs and the weekly PP at 1.3940.
Hourly chart
The Sterling has been guided by strong bullish sentiment this week. The prevailing four-month channel suggests that the pair should still move higher, possibly up to the 1.46 mark where the upper boundary of the senior channel is located.
Meanwhile, the rate could allay its strong momentum and thus end this session with limited gains. In this case, a slight correction south could be expected early next week.
Daily Chart
The bearish market sentiment has increased by four percentage points today, as 56% of traders are holding short positions. Meanwhile, pending orders are still at equilibrium.
The market sentiment of OANDA traders has turned bearish with 52% short positions. Saxo Bank clients are likewise bearish with 60% short positions (+2%).
Spreads (avg, pip) / Trading volume / Volatility