- The number of sell orders inched up from 51 to 56%
- 51% of traders still hold short positions
- Immediate resistance is at 1.2934
- The closest support rests around 1.2875
-
Upcoming events: US CPI and Core CPI, US Retail Sales and Core Retail Sales, US Preliminary UoM Consumer Sentiment
At its latest policy meeting, the Bank of England's Monetary Policy Committee voted by a majority of 7-1 to leave the bank rate at 0.25%, with Kristin Forbes being the only one favouring an immediate hike in rates on the back of an uptick in pipeline inflation pressures that, in her opinion, has pushed the CPI to somewhat uncomfortable levels. Overall, the "no move" came as no surprise, as the vast majority of economists were not expecting to see any change in the monetary policy. In the report, the BoE said that sustainability of the current loose policy would to a great extent depend on inflation expectations holding steady. Despite that, some of the MPC members commented they would give up their dovish stance relatively soon should they see any signs of an upside momentum establishing in GDP or inflation.
In the meantime, the British Central Bank also decided to maintain its government bond-purchase programme at £435B, while holding corporate bond-buying plans at up to £10B. Furthermore, there also were some alterations to the Bank's UK economic forecasts, with officials slashing their 2017 growth outlook to 1.9% from 2%.
Watch More: Dukascopy TV
US CPI and Retail Sales to focus on
The last day of the week brings only US fundamental data, namely the CPI and the Retail Sales. The Retail Sales measure the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending, whereas the Core Retail Sales exclude the automobile sector. As for the CPI, it is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. The Core CPI excludes food and energy in order to capture a more accurate calculation. .
Read More: Fundamental Analysis
GBP/USD continues to consolidate
The GBP/USD currency pair underwent another decline on Thursday, driven mostly by weak fundamental data from the UK. However, the decline helped to prolong the consolidation trend, which began three weeks ago. It is yet uncertain whether the 1.28 or the 1.2850 level is the trend's lower boundary, but the 1.30 mark is representing the upper one. As a result, the Cable still has room for another leg down, despite being supported by the weekly S1 and the 20-day SMA demand cluster just under today's opening price. Meanwhile, technical indicators keep insisting that a positive development is due, but that is possible only if the US inflation data disappoints today.
Daily chart
The Cable managed to retest the ascending channel's support line yesterday, and even more, attempt to breach it today. A failure to regain the bullish momentum is likely to cause the GBP/USD pair to keep falling until the 1.2750 area is reached, that is the next possible turnaround point.Hourly chart
Read More: Technical Analysis
Traders remain neutral
Traders retain a neutral outlook, with 51% of all open positions still being short. The number of sell orders inched up from 51 to 56%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 68% of all open positions are short and the remaining 32% are long. Meanwhile, sentiment at Saxo Bank slightly improved, but still remains strongly bearish, with 60% of traders now being short and the other 40% - long on the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.30 major level, as 59% of survey participants believe so. While the current price is around 1.29, the average forecast for August 12 is 1.3034. The 1.32-1.34 range is now the most popular price interval, having 16% of the votes, while second comes the 1.30-1.32 interval with 15% of the voters, and the third place is tied by the 1.34-1.36, with 13% of poll participants choosing this option.