- The share of sell orders decreased from 59 to 57%
- Bulls are outnumbering the bears by two percentage points
- Main resistance is the monthly R1 at 1.4446
- The nearest support are the weekly PP and the 55-day SMA around 1.4335
- 56% of traders reckon GBP/USD will be at 1.44 or lower in three months
- Upcoming events: UK CBI Industrial Order Expectations, US Existing Home Sales, UK CPI, PPI and RPI, UK Public Sector Net Borrowing, US Flash Manufacturing PMI
The Sterling retained most of its strength after the Thursday's BoE meeting, thus, appreciated against most major currencies on Friday and over the weekend. The largest gains were detected against two commodity currencies, namely 0.60% against the Kiwi and 0.46% against the Aussie. Another significant rally was versus the Euro (0.41%), whereas the GBP/CAD added only 0.18% and GBP/CHF surged 0.16% higher. The smallest gain of 0.10%, however, was registered against the Yen, while the Cable was the only major peer to end the week with a loss of 0.04%.
US consumer confidence unexpectedly worsened in March for the third consecutive month due to concerns of increasing petrol prices and mounting expenses, while the complex labour market situation is undermining any rise in salaries and wages, even though increasing number of people are being employed. The Thomson Reuters/University of Michigan preliminary Consumer Confidence Index dropped to 90.0 points in March, compared with the final 91.7 seen in the prior month, when it had declined to a fresh three-month low. The consumer confidence index reached its all-time high in January 2000, at 112, decreasing thereafter. The gauge has never climbed above 100 again since 2004.
Meanwhile, St. Louis Fed President James Bullard said that the Fed's inflation and employment goals have essentially been met and it would be "prudent" to hike interest rates. Bullard was among the majority of Fed officials who voted to keep rates on hold at the central bank's two-day meeting last week, and he has expressed concern recently about a decline in inflation expectations. However, those expectations have been moving higher lately, and Bullard said that he now feels "inflation net of the oil price shock is reasonably close to target." Yet, he did not indicated when the next interest rate hike should occur.
Another quiet Monday
As far as Monday's go, today once again there are no significant economic data releases to influence the GBP/USD currency pair. The only event that is likely to have some impact is the US Existing Home Sales. The Existing Home Sales, released by the National Association of Realtors, provide an estimated value of housing market conditions. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD.
GBP/USD on the edge returning under 1.44
The British currency remained relatively unchanged against the US Dollar on Friday, but edged slightly lower over the weekend, unable to maintain trade above the 1.45 mark. The Cable is now under the risk of falling back under the 1.44 major level, with the nearest support located even lower—around 1.4335, represented by the weekly PP and the 20-day SMA. Meanwhile, the monthly R1 is weighing on the GBP/USD pair from above, just above today's opening price. Furthermore, the pair is also located in a descending channel, and as technical studies in the daily timeframe suggest, there is still room for a rally towards the channel's upper border near 1.47.
Daily chart
The hourly chart shows that the pair is reluctant to prolong its bullish momentum and reach the current resistance line. The momentum appears to have been reversed and the Cable is edging below 1.44. The 200-hour SMA circa 1.43 could provide sufficient support to cause a rebound.
Hourly chart
Sentiment turns bearish
Bulls are only outnumbering the bears by two percentage points, whereas the share of sell orders decreased from 59 to 57%.
A similar but to a lesser extent attitude is observed at OANDA, where 52% of open positions are long, two percentage points less than yesterday. On the other hand, the gap between SAXO Bank traders is widening, being that 47% of positions are long and 53% are short.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.44 in three months
The majority of traders (56%) believe the British currency is to cost 1.44 or less dollars after a three-month period. The most popular price interval was selected by 19% of the voters, namely the 1.34-1.36 one, while the second most popular choice implies that the Pound is to cost between either between 1.40 and 1.44 dollars, or between 1.46 and 1.48 dollars, or even between 1.48 and 1.50 dollars in three months, all three chosen by 11% of the surveyed. At the same time, the mean forecast for June 21 is 1.4253.