- 53% of pending orders in the 100-pip range are to BUY
- 52% of traders are to sell the Pound (+2%)
- Rate faces significant support circa 1.3470
- Upcoming events: UK Manufacturing PMI, FOMC Members Kaplan and Harker to speak, US ISM Manufacturing PMI
US consumer inflation growth weakened in October, as the hurricane-related increase in purchases of motor vehicles started to fade.
The Fed's closely watched inflation measure, the Core PCE Price Index excluding energy and food increased 1.4% year-over-year in October, though the figure undershot the bank's 2% target for more than 5 years. Recent economic data strengthened projections for the Fed to raise borrowing costs once again in December.
UK and US Manufacturing PMIs
The economic calendar for Friday includes two important data releases, namely, the British Manufacturing PMI and the US ISM Manufacturing PMI for the month of November at 0930GMT and 1500GMT, respectively.
Meanwhile, the President of the Federal Reserve Bank of Dallas Robert Kaplan is to participate in a panel discussion at the Border Economic Development and Entrepreneurship Symposium at 1430GMT, while the President of the Federal Reserve Bank of Philadelphia Patrick Harker will speak about approaches to economic growth at 1515GMT.
GBP/USD slowly heads to weekly R3
In accordance with expectations, in first half of previous trading session the cable made a minor pull back to 1.3440 and then resumed the surge. An existence of two barriers located at the 1.3500 and 1.3530 levels was confirmed, while the pair continued to climb to the top yesterday.
As majority of pending orders both in 50 and 100 pip range are set to buy, the currency rate is expected to continue moving upwards today as well. The bullish scenario is also backed up by fundamental reasons, such optimism related to progress made on Brexit.
However, there is a need to take into account that alleged resistance barriers located at the 1.3560, 1.3580 and 1.3590 might either halt or event slightly turnaround the pair, especially if it matches with release of the US ISM Manufacturing PMI.
Hourly chart
The Pound has been appreciating steadily against the US Dollar during the month of November. This bullish sentiment prevailing within the last two sessions confirmed a breakout of a long-term descending channel valid since mid-2013. Thus, the dominant pattern is currently a channel up which was formed in late 2016.
Meanwhile, technical indicators suggest that the pair might form a minor correction south, starting either today or next week. This movement might lead the pair towards the 1.34 where the upper boundary of the breached channel is located.
In case no fundamentals shake the market today, the Pound is likely to remain in a range between the weekly R2 and R3 in the 1.3470/1.3580 area prior to breaching the latter next week.
Bearish sentiment gets stronger
The SWFX market sentiment has turned bearish, with 52% of open positions being short this Friday. Meanwhile, 59% of pending orders are to buy the Pound (-1%).
The market sentiment of OANDA traders is likewise bearish, as 55% of open positions are short (+1%). In addition, Saxo Bank clients share the same sentiment for the third consecutive session with 66% short positions.