- 55.3% of all pending orders are to buy the Pound
- 62% of all open positions are long
- Possible downside limit for this session located near the 1.2903 mark
- Significant resistance rests circa 1.3008
-
Upcoming Events: US Unemployment Claims, US Philly Fed Manufacturing Index
Britain's inflation fell unexpectedly in June from a four-year high reached in the previous month. The Office of National Statistics reported that the country's Consumer Price Index dropped 2.6% year-over-year, missing expectations for an unchanged reading of 2.9%, while the monthly rate slipped from 0.3% to 0.2% in the in June. The Core CPI, which excludes volatile items such as food and fuel, registered a weaker-than-expected reading of 2.4%, following May's 2.6% figure.
The surprise fall, mainly driven by lower prices of oil and certain recreational and cultural goods, was partially offset by a rise in prices of furnishings and furniture. The strong decrease in the value of the British Pound after Brexit raised costs of imported goods, suggesting that inflation would show at least 3% pace of growth this year. Though, the UK economy being heavily dependent on consumers is expected to face further effects of subdued spending due to outpaced wage growth. Moreover, the weakness in recent reports hinted that the Bank of England is less likely to raise interest rates in the near term.
Watch More: Dukascopy TV
No significant fundamentals today
The only data sets that might affect the currency pair today are the weekly change of the US unemployment claims as well as the Philly Manufacturing Index, which reflects producers' assessment of the current business conditions.
Read More: Fundamental Analysis
GBP/USD fluctuates around weekly PP
Thursday's trading session the currency pair started in a sluggish horizontal movement, being squeezed between the 55- and 100-hour SMAs from the top and the weekly PP at 1.3008 from the bottom. In anticipation of a release of the UK Retail Sales at 8:30 GMT the Pound fell below the above support level towards the 200-hour SMA. But since the data appeared to be better than analysts expected, the pair made a u-turn and started a steady recovery. Accordingly, the second half of the day the rate is expected to spend in attempts to break through the above resistance level, which will be supplemented also by the 20-hour SMA. This scenario is supported by a number of technical indicators, which point out that the pair is oversold.
Hourly chart
A release of the UK Retail Sales information did not bring an expected u-turn, but has only pushed the currency pair closer to the combined support level formed by the 20- and 55-day SMAs as well as the weekly PP at 1.2883. If this barriers succeeds to turn around the Pound, that will serve as a confirmation of an existence of a rising wedge. If it fails, the pair is likely to slide to the next support level set up by the 100-day SMA, the weekly S1 and the 23.6% Fibonacci retracement level at 1.2703Daily chart
Read More: Technical Analysis/
Market sentiment remains bullish
The bullish market sentiment has increased slightly, as 62% of open positions are long, compared to the 59% on Wednesday. Moreover, 56% of pending orders are to buy the Sterling.
On the contrary, traders at Saxo Bank are traditionally bearish on the pair, with 60% of traders holding short positions (63% on Wednesday). Besides, 54% of OANDA clients also hold short positions.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound falling
©Half of all traders believe that the Pound may fall below the 1.30 mark three months from now, as 51% (-6%) of survey participants share this belief. The current spot price is around 1.3015, while the average forecast for October 19 is 1.2958 (1.2929 on Wednesday). However, almost one fifth of the respondents are convinced that the pair would surge above the 1.38 level.