- 63% of pending orders in the 100-pip range are to BUY the Sterling
- SWFX market sentiment is 65% bullish (+1%)
- Upcoming fundamental events: UK CPI y/y and PPI Input; US PPI and Core PPI m/m; FOMC Economic Projections, Statement and the Federal Funds Rate, FOMC Press Conference
Technical signals point to a decline in this session.
The British Pound weakened against the Greenback, following the UK Manufacturing Production data release on Monday. The GBP/USD currency pair lost 37 pips, or 0.28%, to continue fluctuating in the 1.3365 area.
The Office for National Statistics released Manufacturing Production data that came out lower-than-expected of negative 1.4%, compared to the negative 0.1% in the previous period.
One of the main reasons for the negative data was that demand for electrical machinery and steel fell, thus raising concerns about the strength of the UK's economy.
Main attention to Fed
The British Office for National Statistics will start this trading session with the UK CPI and PPI Input at 0830GMT, while the US Bureau of Labour Statistics is set to publish the PPI and Core PPI for the month of May at 1230GMT.
The main attention in this session is put towards the Federal Reserve which is going to publish its monetary policy statement at 1800GMT. The market expects the Federal Funds Rate to be increased to 2.00%, compared to 1.75% at the moment. The FOMC Press Conference is scheduled 30 minutes after the official release at 1830GMT.
GBP/USD returns to Tuesday's opening level
The Pound made two notable jumps against the US Dollar on Tuesday. Their effect, however, was not long, as a movement in the opposite direction followed immediately after. As a result, the Sterling had returned to its opening level by Tuesday evening.The pair being located below all three SMAs points to further decline. This fall is likely to occur, especially if the 100-period (4H) SMA, tested at 1.3360 at the time of this analysis, surrenders. The most probable downside target for today is the psychological 1.33 level or 1.3250.
Meanwhile, fundamentals today may activate bulls that could push the rate for the monthly PP. Given the strong resistance area circa 1.34, the Sterling could lack strength to edge higher past the monthly PP.
Hourly chart
The Sterling has plunged 7.28% against the US Dollar since mid-April. Despite lingering near the 200-day SMA for a couple of days, downside risks prevailed and pushed the rate as low as the 1.3245 late in May.
As apparent on the chart, the Pound has started to recover from its six-month low. This appreciation is expected to continue during the following two weeks. The nearest significant resistance is the monthly PP at 1.3430, while this upward surge should continue until the 200-day SMA, at least.
Daily Chart
The SWFX market sentiment is 65% bullish today. Likewise, 55% of pending orders are to buy the Pound (+3%).
The market sentiment of OANDA is strongly bullish, as 67% of its traders are holding long positions (+2%). Saxo Bank clients are likewise bullish with 59% long positions.
Spreads (avg, pip) / Trading volume / Volatility