- 55% of pending orders in the 100-pip range are to SELL the Sterling
- SWFX market sentiment is 65% bullish (+1%)
- Upcoming fundamentals: British CPI y/y, PPI Input m/m, RPI y/y; FOMC Meeting Minutes
The Sterling returns to its six-month low of 1.34.
The Census Bureau released two data sets simultaneously, where Residential Building Permits for the month of April came out in line with a forecast of 1.35M, moreover, the same number was released in the previous period.
The US Dollar's slight weakening may be affected due to the lower-than-expected Housing Starts data of 1.29M, compared to the forecast of 1.32M.
Several important fundamentals
Wednesday's trading session will start with the British Consumer Price Index, the Producer Price Index and the Retail Price Index for April at 0830GMT. Analysts expect that inflation in the UK grew by 2.5% year-on-year.
Meanwhile, the Federal Reserve is set to publish its Meeting Minutes at 1800GMT.
GBP/USD returns to 1.34
The movement of GBP/USD was dominated primarily by the 55– and 100-hour SMAs during the previous session. The Sterling managed to appreciate mid-session but was nevertheless pressured lower by above moving averages. By Wednesday morning, the pair was located near the 2018 low of 1.34.It is likely that the 55-hour SMA continues to provide bearish pressure for the pair during the following hours, as well. However, the weekly S2 at 1.3350 should remain intact.
In the event of solid British CPI data, the Pound is likely to surge past the 1.3460 area to test the 200-hour SMA and the weekly PP at 1.3510. Additional volatility should be added by the FOMC Meeting Minutes published at 1800GMT.
Hourly chart
Following several days of fluctuating near the 200-day SMA circa 1.3530, the Sterling eventually breached this line and fell down to the 1.3415 mark on Monday morning.
It is expected that a medium-term surge could start this week. In order to confirm this scenario, the aforementioned long-term SMA needs to be surpassed.
Daily Chart
The bullish SWFX market sentiment has remained unchanged with 65% of open positions being long today (-1%). Meanwhile, 54% of pending orders remain to sell the Pound (-1%).
The market sentiment of OANDA traders is strongly bullish, as 60% of them are holding long positions (+1%). Saxo Bank clients share the same sentiment with 60% long positions (+1%).
Spreads (avg, pip) / Trading volume / Volatility