- 61% of pending orders in the 100-pip range are to BUY
- 58% of traders are bullish on the Pound (+2%)
- Nearest support is located circa 1.3220
- Upcoming events: UK CPI y/y, UK PPI Input m/m, UK RPI y/y, MPC Member Tenreyro, FOMC Member Harker and BOE Governor Carney to speak, US Import Prices m/m, US Capacity Utilisation Rate, US industrial Production m/m
The Labour Department showed that the US Consumer Price Index edged 0.5% higher in September, the strongest gain since January, which put the yearly rate of consumer inflation to 2.2% in the reported period.
Separate report showed a 1.6% increase in the country's retail sales, where its sustainable firmness could cause a cease of low inflation trend and confirm the Fed's stance to raise interest rates anytime soon.
Busy day for traders
Contrary to yesterday's calm trading session, Tuesday is full of fundamental events from both the US and the UK. The latter is the main focus of today, as the British Office for National Statistics is to release the CPI, PPI and RPI for the month of September at 0830GMT. In addition, the US will publish its Import Prices, Capacity Utilization Rate and Industrial Production for the same period at 1230GMT and 1315GMT.
Meanwhile, three speeches are scheduled for this session the most important of which is the testimony of the BOE Governor Mark Carney before the Treasure Select Committee at 1015GMT. The two remaining speeches is a testimony of the MPC Member Silvana Tenreyro and a speech by the President of the Federal Reserve Bank of Philadelphia Patrick Harker titled ‘The Role of Transportation in Fostering Inclusive Regional Economic Growth' at 0915GMT and 1700GMT, accordingly.
GBP/USD prepares for inflation release
Although the Pound had all means to continue the surge, but confident appreciation of the Dollar prevented the pair from breaking through the monthly PP at 1.3322. On the other hand, this rebound to certain extent confirmed that the pair is trading simultaneously in three different channels.
The fact that market sentiment is neutral and an aggregate of technical indicators sends a mixed signal suggests that traders are preparing for release of the UK inflation data as well Governor Carney's testimony. If experts' prognoses will match with reality, the rate most probably is going to fall from the junior ascending channel straight to the 200- hour SMA near 1.32.
In the opposite case, bulls will have a good chance to make another attempt bypass the above monthly PP.
Hourly chart
The five-day appreciation streak of the Pound was stopped on Monday when the rate fell back down to the 1.3250 mark. On Tuesday morning, the pair was stranded between the weekly and monthly PP (the latter is also reinforced by the 20-day SMA) in the 1.3234/1.3320 area.
The data release at 0830GMT is likely to cause some turbulence in the market, thus pushing the pair out of this range. The next support is formed by the 38.2% Fibo, the 55-day SMA and the weekly S1 circa 1.3140, while the weekly R1 near 1.3400 is guarding the northern direction.
Daily chart
Bulls become stronger
The bullish SWFX market sentiment has slightly increased on Tuesday, as the number of long positions is currently standing at 58%, compared to 56% on Monday. In addition, 56% of pending orders are to buy the pair (+6%).
OANDA traders remain bullish on the Pound, as 51% of open positions are long (-1%). Meanwhile, traders at Saxo Bank are still bearish with 62% short positions (-1%).