- The share of buy ones declined from 50 to 44%
- Market sentiment remains bullish at 61%
- Immediate resistance is at 1.2537
- The closest support is around 1.2440
- Upcoming Events: US Import Prices, US Reuters/Michigan Consumer Sentiment, US Federal Budget Balance
The number of Americans filing for first-time unemployment benefits declined to an almost 43-year low, official figure revealed on Thursday. Last week's drop in claims was driven by tightening labor market, which is likely to prompt wage growth. According to the US Department of Labor, national jobless claims declined 12,000, to 234,000, during the week ending February 4 from the preceding week's upwardly revised 246,000. Meanwhile, economists anticipated a slighter deceleration to 250,000 during the reported period. Filings have been below 300,000 for 101 straight weeks — the longest streak since 1973. In the meantime, the less volatile four-week moving average of initial claims dropped 3,750 to 244,250, the lowest level since November.
Furthermore, continuing claims increased 15,000 to 2.08 million during the week ended January 28, while their four-week moving average fell 3,750 to 2.08 million. These claims, reported with a one-week delay, reflect the number of people already collecting unemployment benefits. Other data released by the Commerce Department on Tuesday showed US wholesale inventories climbed 1% in December, following a similar gain in November. Excluding automobiles, wholesale stocks grew 0.9% in December. The change in private inventories contributed 1% to GDP growth in the final quarter of 2016.
US Import Price Index and UK NIESR GDP Estimate
Fundamentals from the UK side have already been released, showing positive figures. From this point on attention should be paid to the US Import Price Index. It shows the changes in the price of imported products into the US. The higher the cost of imported goods, the stronger the effect they will have on inflation, redunding in a higher probability of a rate rise. However, from the UK side some impact could still be from the NIESR GDP Estimate, as it is an estimate of growth over the last 3 months up to the report which comes out a month before the official announcement. The report is highly reliable and would influence the UK monetary policy.
GBP/USD in limbo around 1.25
The GBP/USD pair erased its intraday gains on Thursday and slid back under the 1.25 threshold, due to US President Trump's comments boosting the US Dollar. No major changes in the Cable's performance are anticipated today, as the support cluster around 1.2440 is still sufficient to prevent the Pound from edging lower. At the same time, technical indicators are now giving bullish signals, implying fundamental data could restore the Sterling's bullish momentum today. Other technical signs also suggest the British currency is to begin appreciating soon, but political events keep causing aberrations.
Daily chart
The Cable's attempt to stabilise above the 200-hour SMA was once again in vain yesterday. The 1.25 mark appears to be impenetrable at the time being, with the Sterling lacking sufficient impetus to successfully climb over this threshold and remain there.
Hourly chart
Traders mostly bullish
There were barely no changes in the market sentiment over the day, as it remains bullish at 61% (previously 62%). As for the pending orders, the share of buy ones declined from 50 to 44%.
A slightly less optimistic situation is observed elsewhere. For example, 57% of positions open at OANDA are currently long. This is more than the share of shorts (43%), barely sufficient for the sentiment to be called bullish. Meanwhile, sentiment at Saxo Bank is also bullish, with 58% of traders now being long and the other 42% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
By the end of the next three months traders expect the Cable to fall under the 1.22 major level, as 51% of survey participants believe so. While the current price is around 1.25, the average forecast for May 10 is 1.2319. The 1.20-1.22 interval is now the most popular price interval, having 15% of the votes, while on the second place is the 1.14-1.16 price range, with 14% of poll participants choosing it. Furthermore, the 1.16-1.18, 1.18-1.20 and the 1.30-1.32 intervals were each chosen by 11% of the voters.