- 52% of pending orders in the 100-pip range are to BUY
- 55% of traders are bearish on the Sterling (+3%)
- Rate faces significant resistance circa 1.3460
- Upcoming events: UK Net Lending to Individuals m/m; US Preliminary GDP q/q; FOMC Member Dudley, MPC Member Ramsden and BOE Governor Carney to speak; Fed Chair Yellen to testify; US Pending Home Sales m/m
The Sterling weakened against the US Dollar on the Bank of England report showing its stress test results for this year. Britain's biggest lenders all passed the BoE yearly stress tests ever since they were introduced in 2014, the country's Central Bank stated, adding that major banks would continue to contribute to the real economy even in the case of "disorderly" quit from the European Union.
GBP/USD jumped almost 100 base points at 17:30 GMT on the news agencies' reports that the EU and British negotiators reached an agreement on the Brexit bill. Then, the UK government official noted that source's account on the matter was not recognised, but another newspaper confirmed the initial report, keeping the pair nearing 1.3380.
Session full of fundamentals
Various sets of fundamentals are scheduled for this session. The day will start with the British Net Lending to Individuals for the month of October at 0930GMT. In addition, the US is to release its preliminary GDP data for the third quarter of 2017 at 1330GMT and Pending Home Sales during October at 1500GMT.
Meanwhile, four speeches are schedules for today. The BOE Governor Mark Carney and BOE Deputy Governor David Ramsden are due to speak at the Fixed Income Currencies and Commodities Markets Standards Board at 1400GMT and 1445GMT, respectively.
The President of the Federal Reserve Bank of New York William Dudley will participate in a panel discussion about current economic issues at Rutgers University at 1330GMT, while the Federal Reserve Chair Janet Yellen is to testify on the US economic outlook before Joint Economic Committee of Congress at 1500GMT.
GBP/USD jumps by 1.1% amid progress in UK and EU talks
As it was warned yesterday, publication of encouraging news from the United States one after another led to notable appreciation of the buck whose surge was stopped only is support zone located around the weekly S1 at 1.3231.
Since the rebound was based on reports that Britain has finally managed to reach a deal with the European Union, the Pound advanced by 1.1% just in three hour and ended the day at previously mentioned 1.3380 resistance level. Although volatility was high, it did not lead to dissolution of the channel.
In contrast, it forced only to adjust its boundaries. As a result, during this session bulls are expected to continue trying to push the cable to the weekly R1 at 1.3406. But as this indicator crosses upper trend -line of the pattern, a new rebound is expected to follow.
Hourly chart
The Strong upside momentum prevailed in the market during the first half of Wednesday that was driven primarily by fundamental events. Thus, the pair managed to appreciate more than 70 pips and breach the combined resistance of the weekly R1 and the upper boundary of the senior channel circa 1.34.
It is unlikely that bulls are able to maintain their strength for the whole session. Thus, the rate could return below the weekly R1 and consequently close the session somewhere between this line and the weekly PP.
In addition, given that the senior channel has been reached, traders might see the prevalence of the bearish sentiment in the medium term.
Market sentiment is mixed
The SWFX market sentiment remains bearish on Wednesday, as 53% of open positions are short (+3%). Meanwhile, 55% of pending orders are to buy the Pound (+1%).
The market sentiment of OANDA traders has turned bearish, as 52% of open positions are short (+2%). Saxo Bank clients share the same sentiment with 66% short positions (+2%).