- Pending orders in the 100-pip range are at equilibrium
- SWFX market sentiment is 58% bullish (-1%)
- Upcoming fundamental events: UK Construction PMI, US ADP Non-Farm Employment Change, FOMC Statement, Federal Funds Rate
GBP/USD was located near the senior channel early on Wednesday.
The British Pound strengthened against the Greenback, following the UK Manufacturing PMI data release on Tuesday. The GBP/USD currency pair lost 35 pips, or 0.25%, to continue fluctuating in the 1.3687 area.
The Markit released Manufacturing Purchasing Managers' Index that came out lower-than-expected of 53.9, compared to the 55.1 in the previous period. The biggest reaction or downward movement was made on GBP/CAD currency pair by 0.27%.
"The headline PMI dipped to a 17-month low as growth of production, new business and employment all slowed," said Rob Dobson, director at IHS Markit.
FOMC dominates fundamentals
The main fundamental event in this session is the FOMC Monetary Policy Statement and the Federal Funds Rate at 1800GMT. A rate hike is not expected to occur today; so any deviation from this assumption is very likely to cause big fluctuations in the market.
Meanwhile, some other data releases are scheduled during the first part of the day, including the British Construction PMI and the ADP Non-Farm Employment Change published at 0830GMT and 1215GMT, respectively.
GBP/USD plunges to 1.36
Downside pressure prevailed on Tuesday and thus sent GBP/USD for another decline. This bearish momentum began in the wake of disappointing UK Manufacturing PMI released early in the day. It continued to dominate even further until the 1.36 mark was reached.As apparent on the chart, the pair has not still touched the senior channel and the weekly S2 near 1.3550. Thus, this move might occur during the first part of the day. The monthly S1 is likewise located nearby at 1.3527.
Meanwhile, the pair is trading near the bottom boundary of a two-week channel. Even if the aforementioned falls occurs in the following hours, the Pound should eventually strengthen against the US Dollar with gains being capped near 1.38. By and large, traders might be calm before the FOMC statement today.
Hourly chart
The Sterling has depreciated substantially against the Greenback during the past two weeks. Last week marked a breakout from the 55- and 100-day SMAs that add some ground to continuous downside potential.
By Monday morning, the pair had approach the lower boundary of the senior channel circa 1.3960. It seems that the following days should mark a brief bullish reversal prior to breaching this long-term pattern and approaching the 200-day SMA near 1.35.
Daily Chart
The SWFX market sentiment is bullish, as 58% of open positions are long today (-1%). Meanwhile, 63% of pending orders remain to sell the Pound (+4%).
The market sentiment of OANDA traders has turned bullish, as 54% of them are holding long positions (-2%). Saxo Bank clients share the same sentiment with 53% long positions.
Spreads (avg, pip) / Trading volume / Volatility