GBP/USD remained inside the bounds of an upward sloping channel pattern on the daily chart and opened the day with a slip further away from the upper boundary which it had managed to test twice over the last few weeks. The pair has started the day non-volatile and has set two obvious targets for movements to the upside and for dips below at 1.2898 and 1.2829, respectively. The current price level at 1.2847 could, however, also cause some trouble because of previous closes around the area.
British construction activity hit its four-month high last month, suggesting that the economy began a slow recovery after a sluggish start. Markit/CIPS reported on Wednesday that its Purchasing Managers' Index for the UK construction sector came in at 53.1 in April, up from the preceding month's 52.2, while analysts anticipated a slight decrease to 52.1 in the reported month. Activity in the civil engineering sub-sector rose at the fastest pace in more than a year and growth in the house-building sub-sector reached a four-month high. The latest PMI surveys are set to provide significant support to the UK Prime Minister Theresa May ahead of the June 8 National Election. Moreover, the PMIs are expected to please the Bank of England, which is due to meet next week. However, today's release of the Markit Services PMI will provide a better picture of the current economic situation in the country, the services sector contributes around 70% to the nation's GDP. Wednesday's data showed that new orders and output both rose at the fastest pace of this year, whereas unemployment advanced at the strongest pace since May 2016.
The Conference Board CCI dropped more than experts estimated. In April, it lost 3.8% and reached 120.3, thus, marking the first decline since January. The fall was mainly attributable to the less optimistic view of business conditions and the labour market in the upcoming six months. The Department of Commerce reported that orders for durable goods in March soared only 0.7%, following February's increase of 1.8%. Excluding transportation items, orders for core durable goods plunged 0.2%, while analysts anticipated 0.4% growth. The US economy expanded at its weakest pace since the Q1 of 2014 in the three-month period to March, as consumer spending barely rose; however, a rise in business investment and improving pay growth held out hopes that the economy would regain momentum in the upcoming quarters. The Department of Commerce reported on Friday that the economy grew at a 0.7% annual pace in the Q1, following the preceding quarter's 2.1% and falling behind expectations for a 1.3% climb.
On the agenda: US Unemployment Claims
GBP/USD abandons previously tested area
GBP/USD opened red on the daily chart Thursday morning, setting a downside target at 1.2829 in sight. The area is represented by the daily S1 and is most likely to be up for solid tests today. Because of the proximity to the area, the cross might lack general volatility today in order to respect the area. In case of severe downside volatility around 15:30 GMT when the US unemployment claims data comes out, 1.2762 might be the level more likely to cut the movement with more demand at 1.2729. Upside risks are currently limited to 1.2898.
Daily chart
Hourly chart
Traders are equally divided
There are 50% of traders holding short positions today (previously 50%), whereas 56% of all pending orders are to acquire the Pound.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 63% of all open positions are short and the remaining 37% are long. Meanwhile, sentiment at Saxo Bank worsened again over the day, with 57% of traders now being short and the other 43% being long on 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 1.28 major level, as 67% of survey participants believe so. While the current price is around 1.29, the average forecast for August 04 is 1.2943. The 1.30-1.32 range is now the most popular price interval, having 16% of the votes, second comes 1.34-1.36, but the third place is tied by 1.28-1.30 and 1.32-1.34, with 13% of poll participants choosing either option.