- 60% of pending orders in the 100-pip range are to SELL
- 58% of traders are bullish on the Sterling (-1%)
- Gains could be capped near 1.41
- Upcoming events: BOE Inflation Report, MPC Official Bank Rate Votes, BOE's Monetary Policy Statement, BOE's Official Bank Rate, BOE Inflation Letter, MPC Asset Purchase Facility Votes, US Unemployment Claims
The Halifax HPI reports caused a short-lived bullish reversal in the Sterling against the US Dollar. The pair added 9 base points, though continued to decline further, reaching the 1.3900 area.
The UK house prices declined surprisingly last months, as consumer inflation kept squeezing household budgets, putting the yearly house price growth to the lowest level in years, the Halifax release showed on Wednesday. Average home prices decreased 0.6% in the month of January, after being 0.8% down in the prior month. Britain's annual growth of house prices kept slowing since the vote to quit the European Union, nut the impact concentrated in the area of the City of London and its neighbouring sites.
Traders await BOE monetary decision
The focus in this session is set towards the Bank of England which is to release a set of noteworthy fundamentals at 1200GMT, namely, the Inflation Report, MPC Official Bank Rate Votes, Monetary Policy Statement, Official Bank Rate, Inflation Letter and MPC Asset Purchase Facility Votes.
Meanwhile, the US Department of Labour will release the weekly unemployment claims at 1330GMT.
GBP/USD awaits BOE data
GBP/USD was trading in a calm manner slightly below the monthly PP and the weekly S1 on Wednesday morning. However, the bearish pressure from the 55-hours SMA resulted in a brief southward movement down to the 1.3850 mark.
It is likely that this moving average continues to guide the Sterling within the following trading hours until fundamentals from the Bank of England scheduled for 1200GMT introduce volatility in the market. The daily high should be the 1.4050 area, while other resistance levels along the way are also expected to hinder strong hourly surges.
From the downside, the pair is supported by the weekly S2 at 1.3829. In case of strong downside risks, the Pound could try to test the 1.37 level, reinforced by the weekly S2 and the monthly S1.
Hourly chart
The Pound continues to weaken against the US Dollar for the fifth consecutive session. The strong downside movement has allayed considerably during the past few days, thus pointing to a brief prevalence of bulls. However, it should be noted that the pair faces a strong resistance cluster on the hourly chart that could limit gains in this session.
Daily chart
SWFX market sentiment remains bullish today, as 58% of traders are holding long positions, compared to 59% on the previous session. Meanwhile, 51% of pending orders are to sell the Pound (-4%).
The bearish sentiment of OANDA traders has weakened to 55% of all open positions being short (-4%). Saxo Bank clients share the same sentiment with 58% short positions (-1%).
Spreads (avg, pip) / Trading volume / Volatility