The UK's total trade deficit in goods and services widened in May to £2.3bn in May; however, was not as bad as the £3.6bn forecasts made by economists. The following tendency could be explained by deteriorating export versus the import, as the pound has depreciated. Meanwhile, exports dropped 4.4% on a monthly basis while imports slipped down 3.5%. Focusing on visible trade in goods, the Office for National Statistics calculated that the UK's trade deficit for May contracts and equalling to £9.88bn from the £10.53bn in April, better than the £10.70bn forecast. Moreover, for the three-month period March to May, exports advanced 3.2% compared to the three months to February, which was markedly above the 1.1% increase in imports in the same period.
In the meantime, sterling has continued to stabilise, but failed to make any notable gains after less than expected decline of 0.5% in industrial production, since many expected the fall to be in the region of 1%. Concerning politics, the race towards the next prime minister is now narrowed to the final two, namely current home secretary—Theresa May and energy secretary, Andrea Leadsome, who was a major campaigner to leave the EU. The decision will be made by the Conservative Party's 150,000 members.
Mostly uneventful beginning of the week
GBP/USD keeps hovering above 1.29
The Sterling managed to regain some value against the US Dollar on Friday, having edged 47 pips higher that day. However, compared to the previous movements the pair remained relatively unchanged, unable to reach any significant level. The outlook is unchanged, as there is no impetus for serious developments present today. Meanwhile, technical indicators are giving bearish signals, suggesting the GBP/USD pair could gravitate back towards the 1.29 mark, rather than remaining unchanged again. The nearest area to limit the gains rests at 1.3033, namely the weekly PP, whereas the weekly S1 represents immediate support at 1.2724.
Daily chart
Hourly chart
Bulls remain in control
Now 65% of traders are long the Pound (previously 63%), while the number of sell orders inched up from 50 to 58%.
Compared to Wednesday, there are slightly less bulls at OANDA - they take up 57% of the positions open with the Canada-based broker. Sentiment at Saxo Bank grew stronger, as here the number of bulls exceeds the number of bears by 10 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.40 in three months
More than half of traders (58%) believe the British currency is to cost 1.40 or less dollars after a three-month period. The most popular price intervals was selected by only 13% of the voters, namely the 1.28-1.30 one, while the second most popular choice implies that the Sterling is to cost either between 1.24 and 1.26, or between 1.36 and 1.38, or 1.40 and 1.42 or even between 1.42 and 1.44 dollars in three months, all four chosen by 10% of the surveyed. At the same time, the mean forecast for Oct 11 is 1.3772.