- 57% of pending orders in the 100-pip range are to SELL the Pound
- 56% of open positions are short
- The nearest support is set by the 55-hour SMA and the weekly R1 at 1.4150
- Important for today: British Manufacturing Production m/m, US (Core) CPI m/m, FOMC Meeting Minutes
The Sterling managed to shot up to a senior trend-line circa 1.4220 early today, so a reversal might occur.
The Bureau of Labor Statistics revealed better-than-expected data in producer price index in March. It was mainly led by the increase in costs of an airline and healthcare services, pointing out to the wholesale inflation pressures. Economists give their opinion about inflation being pushed towards the Fed's two percent target at the end of this year in a form of the weak dollar, tight labor market and fiscal stimulus.
Busy session
Wednesday's trading session will start with the British Manufacturing Production and Goods Trade Balance during February at 0830GMT.
The rest of the session is allocated to the United States. The US Bureau of Labour Statistics will publish the Consumer Price Index and its core reading at 1230GMT. The CPI is expected to remain constant month-on-month, while the core CPI should see a 0.2% increase. In addition, the FOMC is to release its Meeting Minutes at 1800GMT.
GBP/USD restricted by weekly R1
Bulls have still refused to abandon their positions for the third consecutive session, thus managing to push the Sterling even higher against the US Dollar. The pair found some minor resistance at the weekly R1, but was nevertheless pressured higher up to the weekly R2 circa 1.42.The Pound might still want to use the slight upside potential that is apparent until a downward-sloping trend-line at 1.4220 prior to initiating a corrective move south. The nearest support that might hinder the pair is the 55-hour SMA and the weekly R1 at 1.4150.
Given that this trading session includes several noteworthy fundamentals, this support cluster is expected to be breached, thus widening the southern potential down to the 100– and 200- hour SMAs located in the 1.4075/95 range.
Hourly chart
The Sterling has been appreciating gradually against the US Dollar since the beginning of March – the movement which has been guided by the 55-day SMA.
Technical indicators on the daily time-frame are gradually moving south, so a breakout of the 55-day SMA is expected within the following weeks. This scenario is likewise supported by the pair's downward-sloping movement in two long-term channels.
A breakout of the 55-day SMA should push the Pound towards the 100-day moving average currently located near the 1.38 mark.
Daily Chart
The SWFX market sentiment is once again bearish, as 56% of open positions are short in this session (+3%). Meanwhile, 51% of pending orders is to buy the Sterling.
OANDA traders remain bearish on the Pound with 54% of their open positions being short (+2%). Saxo Bank is likewise increasingly bearish with 64% of its clients holding short positions (+4%).
Spreads (avg, pip) / Trading volume / Volatility