60% of pending orders in the 100-pip range are to SELL- 55% of traders are bearish on the Sterling
- Gains could be capped near 1.4050
- Upcoming events: MPC Members Vlieghe and McCafferty to speak
The Sterling depreciated against the US Dollar, following factory output data on Friday. The GBP/USD exchange rate lost 36 pips or 0.26% in the next half an hour, though the downtrend was weakened by the NIESR GDP estimate report.
The UK industrial output fell by the most since 2012 in the month of December, as the main oil pipeline was shut down temporarily, but the manufacturing growth confirmed the economy's strong expansion pace at the 2017 end. The separate report by the National Institute of Economic and Social Research showed that Britain's economy expanded 0.5% in the three month period ending in January, supporting the 1.9% annual growth rate forecast, slightly faster than the BoE anticipated.
Quiet session
The only fundamentals scheduled for today are speeches by two External members of the British Monetary Policy Committee. Gertjan Vlieghe will speak about household debt at the Resolution Foundation in London at 0950GMT, while Ian McCafferty is going to discuss the economic outlook and monetary policy in an interview conducted by Iain Dale at 1630GMT.
GBP/USD restricted by strong resistance
Friday's morning session was spent relatively calm for GBP/USD, as it was restricted from both sides by the 55– and 100-hour SMAs. The bearish sentiment, reinforced by slugglish UK fundamentals, eventually took over the market, thus resulting in a 153-pip plunge in a couple of hours. This fall halted near the Febrary low of 1.38.
The pair's subsequent movement was tended north towards a resistance cluster formed by the 55– and 100-hour SMAs and the weekly PP circa 1.39.
This trading session should be quiet in terms of fundamentals; thus, the Sterling might lack the necessary bullish momentum to move past its nearest resistance. A successful breakout should be stopped near the monthly PP at 1.40.
Meanwhile, a potential southern barrier could be the weekly and monthly S1s at 1.3675.
Hourly chart
The strong bearish momentum on Friday resulted in a breakout of the prevailing three-month ascending channel. This suggests that the Sterling could edge lower against the Greenback this week down to the weekly and monthly S1s and the 55-day SMA near the 1.3670. This scenario is supported by technical indicators.
Daily chart
The bearish market sentiment has taken the upper hand in this session, as 55% of traders are holding short positions (-2%). Meanwhile, 52% of pending orders are to sell the Pound (-2%).
The bearish sentiment of OANDA traders has strengthened to 56% of all open positions being short (+4%). Saxo Bank clients share the same sentiment with 59% short positions (-1%).
Spreads (avg, pip) / Trading volume / Volatility