- 57% of pending orders in the 100-pip range are to BUY the Pound
- SWFX market sentiment is 68% bullish (+6%)
- Upcoming fundamental events: UK Retail Sales m/m, Philly Fed Manufacturing Index, US Unemployment Claims, FOMC Member Quarles to speak
Strong bearish sentiment has pushed the Pound back to its 2018 low.
The British pound weakened against the Greenback, following the UK CPI data release. The GBP/USD currency pair lost 46 pips, or 0.36%, to continue fluctuating in the 1.3039 area.
The Office for National Statistics released CPI data that came lower-than-expected of 2.4%, compare to forecasted 2.6% and stayed unchanged from the previous period.
A Senior Economist from Hargreaves Lansdown, Ben Brettell said: "Markets had been pricing in around an 80% chance the Bank would lift borrowing costs in August, but today's inflation data combined with yesterday's lacklustre wage growth figures could force policymakers into a rethink."
British Retail Sales
The British Office for National Statistics is set to release Retail Sales for the month of June at 0830GMT. This data release will be covered by the Dukascopy research team shorty prior to this event.
The remaining part of the day is allocated to semi-important fundamental releases from the United States, such as the Philly Fed Manufacturing Index and the weekly Unemployment Claims at 1230GMT. In addition, the Federal Reserve Governor Randal Quarles will deliver opening remarks at the Alternative Reference Rates Committee Roundtable at 1300GMT.
GBP/USD recovers from eight-month low
Despite hindering the pair for several hours, the weekly S1 was eventually breached at 1.3106 early on Wednesday. Bearish momentum was strengthened by rather sluggish UK CPI data which sent the Pound for a 44-pip hourly plunge. This paved the way for a fall down to the eight-month low and the monthly S1 at 1.3020, thus resulting in a southern breakout of a two-week channel down.The rate has since recovered and been moving towards the 55-hour SMA at 1.3130. The 100– and 200-hour SMAs are likewise located nearby—resistance which is likely to limit gains today. Upside potential is apparent until 1.32 although the pair might not reach as high.
In case of some bearish movement, the aforementioned 2018 low should work as an unbreakable support.
Hourly chart
By reviewing the daily chart of the GBP/USD pair, it was discovered that there exists a descending channel pattern that has been in action since the middle of April. The recent rebound managed to break this pattern.
Thus, it is assumed that there is a larger dominant pattern lacking from the picture, as the already broken pattern has to be a junior representation of a larger price movement.
Daily Chart
This indicates that for the last couple of trading sessions nothing has changed. Retail traders remain bullish and some even expect to open more long positions, if the currency rate reaches certain criteria. For example, it breaks the resistance on the daily chart.
The bullish market sentiment of OANDA has slightly decreased to 67%, compared to 70% on Tuesday. Saxo Bank clients share the same bullish sentiment with 61% of positions being long today (-2%).
Spreads (avg, pip) / Trading volume / Volatility