- 53% of pending orders in the 100-pip range are to buy
- 53% of traders are bullish on the Pound
- Important resistance lies near 1.3340
- Upcoming events: UK Construction PMI, FOMC member Powell speaks
The GBP/USD kept declining gradually after the weaker-than-anticipated Britain's manufacturing PMI figures. The Sterling fell against the US Dollar by 11 base points to rebound from the 1.3305 mark, but continued to consolidate nearing the 1.3280 area, additionally supported by the US economic report causing bullish stance on the Greenback.
Markit report showed on Monday that the UK Manufacturing PMI fell to 55.9 points in September, below initially anticipated 56.4 points. The decline in the Index was related to the strengthening of the British Pound, which made manufactured products less attractive to be purchased. Meanwhile, the pair partially lost its gains due to expectations for the BoE interest rate increase in November.
No significant market shakers on Tuesday
Apart from some minor data releases thorough the day, only two events of great and medium importance are scheduled for this session, namely, the British Construction PMI at 0830GMT and the speech by the Federal Reserve Governor Jerome Powell at 1230GMT.
GBP/USD reaches bottom edge of channel down
A combination of release of worse than expected British and better than expected American manufacturing activity data created a downside momentum, which was strong enough to drive the pair through a combined support formed by the monthly PP at 1.3322 and the weekly S1 at 1.3305 and push right to the bottom edge of senior descending channel.
From daily perspective, the exchange rate has to continue to pave the way to the south. But in the short run it might make a rebound, as the above boundary is secured by the weekly S2 at 1.3210. Plus there is a need to take into account that the 1.3200 mark represents a psychological support level and might be surrounded by many buy limit orders.
However, the UK Construction PMI data release might also leave certain impact on the pair.
Hourly chart
Downside risks pushed the GBP/USD exchange rate for a decline on Monday, thus resulting in a 96-pip daily fall. This movement south pushed the rate in a narrow range between the weekly S1 and S2 and the monthly PP in the 1.3322/1.3211 area.
Daily chart
Market sentiment is strongly bearish
SWFX market sentiment is bullish on Tuesday, as the number of long positions is 53%, compared to 52% on Monday. In addition, 54% of pending orders are to buy the Pound (-4%).
Meanwhile, OANDA traders remain bearish on the Pound, as 58% of open positions are short (-5%). Traders at Saxo Bank are likewise bearish with 62% short positions (-3%).