- 55% of all pending orders are to buy the Pound
- 60% of all open positions are long
- The possible upside limit rests at 1.2949
- Significant support rests circa 1.2883
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Upcoming Events: UK Services PMI, US Factory Orders m/m, US IBD,TIPP Economic Optimism, FOMC Meeting Minutes
Manufacturing activity in Britain slowed unexpectedly last month, a private survey showed on Monday. Markit report showed that its PMI for the UK manufacturing sector came in at 54.3 points in June, falling to a three-month low from a downwardly-revised figure of 56.3 in the preceding month. However, analysts expected a smaller decline to 56.4 for the month from May's originally reported 56.7.
Growth of the country's manufacturing output slowed as businesses showed smaller increases in demand for new domestic orders, while export orders marked the weakest pace of growth in five months. Though, some economists expect the UK economy to show stronger growth in the Q2 with stronger competitiveness boosted by the weak Sterling. However, export orders are set to put downward pressures on further economic expansion. Meanwhile, overall confidence weakened to a seven-month low amid the beginning of the Brexit talks and more uncertainties surrounding the UK outlook. Opposite to Britain's faltering manufacturing sector, manufacturing activity in other EU countries rose to its highest level in six years in June.
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FOMC Meeting Minutes
Two sets of important data are set to be released in this trading session, namely, UK's Services PMI and the FOMC Meeting Minutes at 0830 and 1800 GMT, respectively. The greatest significance for this pair is certainly put on the latter. In addition, the US is to publish m/m factory orders and IBD/TIPP Economic Optimism at 1400 GMT.
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GBP/USD shows lack of momentum
On Tuesday, the Sterling was restrained by a combination of the 55– and 100-hour SMAs that limited its gains until the 1.2950 mark. Thus, GBP/USD was characterised by a consolidation period, failing to form a distinctive move either direction. However, the pair did trade in a slight movement downwards that may result in a formation of a channel down if sustained. Technical indicators are generally neutral for the upcoming hours, but slightly bullish on the daily time-frame. However, it is more likely that the rate trades lower and tests the monthly PP at 1.2883 early on Thursday. This scenario depends on the rate's inability to cross the 55-hour SMA. On the contrary, the Sterling may also continue to move sideways, thus surpassing the 55-hour SMA at some point.
Hourly chart
The Pound lacked momentum on the morning session, resulting in a relatively flat candle. Taking into account intraday signals, the rate is likely to test the monthly PP at 1.2883. The given level is likewise reinforced by the 55-day SMA. The nearest resistance, however, is very distant, being located at the 1.3212 mark (38.2% Fibo).Daily chart
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Bearish sentiment prevails
Market sentiment is bullish on Wednesday, as 60% of open positions are long. Likewise, 55% of set up orders are to buy the Pound.
On the contrary, traders at Saxo Bank remain bearish on the Sterling, with 63% of traders holding short positions (64% previously). Moreover, 62% of OANDA clients hold short positions.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound falling
© Dukascopy Bank SAThe majority of traders believe that the Cable is to fall below the 1.28 mark three months from now, as 58% (+2%) of survey participants share this belief. The current spot price is around 1.2920, while the average forecast for October 5 is 1.2765 (1.2775 on Tuesday). The 1.24-1.26 range remains the most popular price interval, having 26% of the votes (+1%).