- 92% of pending orders in the 100-pip range are to sell the pair
- 56% of traders are bearish on the Pound
- Important support lies near 1.3530
- Upcoming events: UK PM Theresa May to speak
The Sterling strengthened significantly against the US Dollar, as all the main components of the UK retail sales report showed better-than-expected figures for August. After the release, the GBP/USD jumped by 0.67% or 91 base point to touch the daily high of 1.3606 However, by the next couple of hours the pair resumed trading in a weaker area between the 1.3525 and 1.3560 marks.
The most important fundamental event that is likely to shake the given currency pair in this session is the speech by the British Prime Minister Theresa May; the time, however, is still tentative. In addition, there are some minor releases scheduled for today, such as the UK CBI Industrial Order Expectations at 1000GMT and the US Flash Manufacturing PMI and Flash Services PMI at 1345GMT.
UK Prime Minister to speak on Friday
Apart from some minor data releases during this session, two data sets from the United States scheduled for 1230GMT should be taken into account. The Department of Labour is to publish weekly Unemployment Claims, while the Federal Reserve Bank of Philadelphia is to release its Manufacturing Index. However, prior to this, the UK is to publish Public Sector Net Borrowing at 0830GMT.
GBP/USD confirms resistance at 1.3600
Although the pair managed to break through a combination of the 55- and 100- hour SMAs yesterday, the surge was stopped a little bit below the 1.3600 mark, thus confirming an existence of a strong barrier in that area.
It appears that during this whole trading week movement of the exchange rate was guided by some sort of rectangle pattern whose resistance line was located near the 1.3600 level and the support line near the 1.3475 level. On the one hand, there is a high chance that the pair will spend the rest of the day in this established formation, as it faces no significant pressure from technical indicators.
On the other hand, a speech that will be delivered by PM May about post-Brexit relations with the EU is likely to have a notable impact on the value of Pound.
Hourly chart
GBP/USD has been testing the upper boundary of a long-term channel for the last five trading sessions, but has failed to overcome this area. Meanwhile, the strong appreciation apparent since early September has sent technical indicators in the overbought territory. Taking all this into account, it is likely that the Pound falls against the US Dollar in the long-term. In terms of this trading session, the pair remains stranded between the monthly R3 and R2 at 1.3702 and 1.3448, respectively.
Daily chart
Market sentiment is bearish
The bearish market sentiment has once again taken the upper hand, as the number of short positions on Friday is 56%. Meanwhile, 51% of pending orders are to buy the Pound.
OANDA traders are bearish on the pair, as 63% of open positions are short (unchanged from Thursday). Traders at Saxo Bank are likewise bearish with 70% short positions (-1%).