- All pending orders are now equally divided between buy and sell ones
- 68% of traders are long the Sterling
- Immediate resistance is at 1.2415
- The closest support is around 1.2381
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Upcoming Events: US President Trump's Speech, UK CPI and Core CPI, UK HPI, UK PPI Input, UK RPI, UK Public Sector Net Borrowing, US Current Account
US industrial production was unchanged last month, while market analysts anticipated an increase, official figures revealed on Friday. The Federal Reserve reported factory production came in at 0.0% in February, falling behind analysts' expectations for a gain of 0.3%. Meanwhile, January's initially reported drop of 0.3% was revised to a 0.1% fall. However, manufacturing production, which accounts for 75% of overall industrial output, posted a 0.5% increase in February that matched the preceding month's rise. A global economic recovery, stronger business investment in equipment and appropriate inventory levels allowed manufacturers to gain momentum over the last several months. The advance in manufacturing output was in line with analysts' forecasts.
Data also showed utility output decreased 5.7%, following a 5.8% decline in January. The fall was mainly driven by unusually warm temperatures. Mining production rose 2.7% last month, boosted by oil and gas drilling. Business equipment output advanced 0.7% in February, compared to a 0.1% decline registered in the prior month, whereas production of construction supplies increased 1.3% after climbing 1.4% in January. Other data released on Friday showed mood of American shoppers jumped to 97.6 in March, according to the preliminary reading released by the University of Michigan.
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Uneventful Monday
On Monday there are no significant events to influence the Cable, with exception of President Trump's Speech. However, following the rate hike Trump's words are unlikely to spark any serious volatility. Nevertheless, tomorrow attention could be paid to the UK inflation data, namely the CPI. It is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of GBP is dragged down by inflation, The CPI is a key indicator to measure inflation and changes in purchasing trends. Meanwhile, the Core CPI excludes volatile products such as food and energy in order to capture a more accurate calculation. Next is the PPI Input, which is a monthly measure of the rate of inflation experienced by the UK when buying goods and services. It captures changes in the average price of fixed basket of goods and services purchased by the UK Manufacturers. From the US side the Current Account will be due. It is a net flow of current transactions, including goods, services and interest payments into and out of the US. A current account surplus includes that the flow of capital into the US exceeds the capital reduction. Normally, a high reading is seen as positive, whereas a low reading is seen as negative.
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GBP/USD in limbo between 55 and 100-day SMAs
The Cable managed to unexpectedly recover from its intraday low on Friday, ultimately ending trade in the green zone. Moreover, the British Pound was able to breach the immediate resistance, but with gains unable to climb over the 1.24 major level, where psychological resistance was strong. Friday's rally only confirmed the overall outlook, with the GBP/USD pair now being one step closer to reaching its main goal, namely the nine-month down-trend. The final obstacle ahead of this target is the 100-day SMA, which provides resistance circa 1.2415, but technical studies are unable to confirm the possibility of another positive outcome.
Daily chart
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The pair's recent developments went in line with the broadening rising wedge pattern on the hourly chart. However, according to the wedge, the Cable could be on the edge of a downside breakout, which could spark significant bearish momentum and prevent the exchange rate from reaching its main target.Hourly chart
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Traders mostly bullish
There are still 68% of traders being long the Sterling today, while all pending orders are now equally divided between buy and sell ones.
A slightly less optimistic situation is observed elsewhere. For example, 59% of positions open at OANDA are currently long. This is more than the share of shorts (41%), barely sufficient for the sentiment to be called bullish. Meanwhile, sentiment at Saxo Bank is also bullish, with 60% of traders now being long and the other 40% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
© Dukascopy Bank SABy the end of the next three months traders expect the Cable to fall under the 1.22 major level, as 55% of survey participants believe so. While the current price is around 1.23, the average forecast for June 20 is 1.2282. The 1.20-1.22 ranges is now the most popular price interval, having 15% of the votes, while on the second place are the 1.14-1.16, 1.28-1.30 and 1.30-1.32 price ranges, all three with 13% of poll participants choosing them. Furthermore, the 1.16-1.18 and the 1.18-1.20 intervals were each chosen by 11% of the voters.