- 55% of pending orders in the 100-pip range are to SELL
- 60% of traders are bullish on the Pound (-4%)
- Significant resistance is located circa 1.3320
- Upcoming events: US CPI and Core CPI m/m, US Core Retail Sales m/m, US Retail Sales m/m, US Preliminary UoM Consumer Sentiment, FOMC members Evans and Kaplan to speak
The Labour Department revealed that the US Producer Price Index climbed 0.4% in September.
Data suggested the growth fuelled by higher gasoline prices, as they marked the strongest rise in two years due to production disruptions in Texas oil refineries caused by Hurricane Harvey. Moreover, the gain is set to bolster the Fed's case for the next rate hike this year despite sluggish inflation readings.
US fundamentals in focus
Friday's trading session will be all about fundamentals from the US. The given vountry is to release four sets of important data for the month of September at 1230GMT, namely, the CPI and Core CPI, the Retail Sales and Core Retail Sales. In addition, the University of Michigan is to publish its preliminary Consumer Sentiment at 1400GMT.
Finally, the session will end with speeches by two FOMC members. The President of the Federal Bank of Chicago Charles Evans is to speak about the economy and monetary policy at the Wisconsin Summit on Financial Literacy at 1425GMT, while the President of the Federal Reserve Bank of Dallas Robert Kaplan will address the same issues at the Chartered Financial Analyst Institute at 1530GMT.
GBP/USD approaches 1.33
The British Pound had a very challenging trading session yesterday. Due to comments made by the EU Chief Negotiator Michel Barnier about a "deadlock" in Brexit negotiations the Sterling lost 116 basis points against the Greenback just in couple of hours.
Despite a release of better than expected US Core PPI data, traders managed to return the pair to the pre-fall 1.3250 level. In the first half of this trading session the currency rate is expected to test a resistance near the 1.3290 mark.
However, whether the cable will manage to soar and bypass the 1.3300 level or fall back to the 200-hour SMA near 1.3192 will depend on release of data about the US CPI and retail sales, which, in turn, will have major implications on decision about the need of another interest rate hike this year.
Hourly chart
The Pound continues to recover some ground against the US Dollar for the fifth consecutive session. The trading range has largely remained the same, as the rate is being stranded between the weekly R1 and the monthly PP from above and the weekly PP, the 38.2% Fibonacci retracement and the 55-day SMA from below. The former might be breached in case of a strong upside momentum; however, the rate is not expected to move past the 20-day SMA at 1.3342.
Daily chart
Bullish market sentiment slightly weakens
SWFX market sentiment has decreased on Friday, as the number of long positions is currently standing at 60% (-4%). In addition, 52% of pending orders are to buy the Pound (-1%).
Market sentiment of OANDA traders remains bullish this session, as 55% of open positions are long (+3%). Meanwhile, traders at Saxo Bank are still bearish with 59% short positions (-1%).