- 54% of pending orders in the 100-pip range are to SELL
- 55% of traders are bearish on the Sterling (+2%)
- Strong support circa 1.3830
- Upcoming events: UK Retail Sales m/m, US Preliminary UoM Consumer Sentiment, FOMC Member Quarles to speak
Building permits were down 0.1% to a 1.30M units rate in December, adding to a total 4.7% rise to a rate of 1.26M units in 2017, the strongest level in ten years.
The reports also revealed that the US homebuilding activity decreased more than anticipated by the end of 2017 to mark its largest drop in just a year, due to a steep fall in the single-family housing units construction. Housing starts dropped 8.2% to a seasonally adjusted yearly rate of 1.19M units, which is expected to be transitory amid solid demand for housing, driven by a strong labour market.
UK Retail Sales at 0930GMT
Friday's trading session will start with the British Retail Sales for December at 0930GMT. In addition, the University of Michigan is to publish its preliminary Consumer Sentiment at 1500GMT. The last fundamental event of the day is a speech by the Federal Reserve Governor Randal Quarles at the Banking Law Committee Meeting at 1715GMT.
GBP/USD loses upside momentum
The Pound continues to appreciate against the US Dollar for the sixth consecutive session. The pair managed to edge higher on Thursday; however, it lost its momentum near the 2017 high of 1.3925.
This suggests that bulls might have exhausted their strength, thus paving the way for a possible decline in price. This is likewise apparent from the two short-term channels drawn on the chart, as the Sterling has failed to reach their upper boundaries this week.
By and large, it is expected that the pair trades sideways in this session, especially if the southern barrier is provided by the 55– and 100-hour SMAs and the weekly R1 circa 1.3830. In case bears push even lower, the ultimate daily low should be the monthly R2 at 1.3707.
Meanwhile, the next notable resistance is the distant weekly R3 at 1.4119.
Hourly chart
Despite showing signs of reversal, the Pound managed to push even higher on Thursday. However, daily technical indicators are located near historic highs, thus pointing to a soon reversal.
Even if the bullish sentiment prevails in this session, the weekly R2 and the upper boundary of a long-term channel should pressure the rate south within the following week.
Daily chart
The SWFX sentiment remains bearish in this session, as 55% of traders are holding short positions (+2%). In addition, 54% of pending orders are to sell the Sterling (-1%).
The bearish sentiment of OANDA traders has remained at the same level for the second consecutive session with 57% short positions. Saxo Bank clients share the same sentiment with 68% short positions (+3%).
Spreads (avg, pip) / Trading volume / Volatility