US consumer prices fell unexpectedly last month, marking the first decline in more than a year, official figures revealed on Friday. The Labour Department reported its CPI dropped 0.3% in March, following the preceding month's gain of 0.1%, while the so-called core CPI, which excludes volatile items, fell 0.1% in the reported month, following February's 0.2% increase. Meanwhile, market analysts expected the CPI and the core CPI to come in at 0.0% and 0.2%, respectively. According to the Labour Department, the decline in inflation was driven by lower gasoline and telephone services prices, which plunged 6.2% and 7.0%, accordingly. However, the price food advanced 0.3%, while the cost of medical care climbed 0.4% last month. Prices of motor vehicles and apparel declined 0.3% and 0.7%, respectively. The Labour Department reported also that retail sales fell 0.2% in March amid lower demand for automobiles, while analysts anticipated a 0.1% increase.
Moreover, the preceding month's gain of 0.1% was revised down to a -0.3%. Excluding volatile items, retail sales came in at 0.0%, below expectations for a 0.1% rise but in line with February's revised reading. Friday's data suggested that US economic growth slowed significantly during the Q1 of 2017.
Another quiet Monday
GBP/USD risks breaking the down-trend
Poor US fundamentals on Friday allowed the British Pound to erase most of Thursday's losses against the US Dollar, causing the six-month down-trend to be put to the test again today. From the technical perspective the GBP/USD currency pair should now undergo another decline, with the weekly pivot point and the 20-day SMA circa 1.2490 limiting the losses, assuming the 1.25 major level is breached. However, technical indicators keep giving bullish signals in the daily timeframe, suggesting the trend-line might be pierced soon. A breach would not imply a complete trend reversal, as the 200-day SMA near 1.2930 is required to be overcome for that to occur.
Daily chart
Hourly chart
Traders mostly bullish
Bulls barely remain in control, as 54% of all open positions are long. At the same time, 51% of all pending orders are to sell the Sterling.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains somewhat bearish, but there are still not that many more bears than bulls, namely 52% of all open positions are short and the remaining 48% are long. Meanwhile, sentiment at Saxo Bank slightly worsened over the weekend, with 54% of traders now being long and the other 46% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
By the end of the next three months traders believe the Cable is to rise above the 1.26 major level, as 51% of survey participants believe so. While the current price is around 1.25, the average forecast for July 17 is 1.2532. The 1.18-1.20 range is now the most popular price interval, having 16% of the votes, while on the second place are the 1.20-1.22, 1.26-1.28 and the 1.28-1.30 price ranges, with 14% of poll participants choosing each of them. Furthermore, the 1.30-1.32 interval was selected by 11% of the voters.