- The share of purchase orders is at 60%
- 51% of all open positions are short
- Immediate resistance is around 1.3023
- The closest support rests circa 1.2985
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Upcoming Events: FOMC Member Harker's Speech; FOMC Member Kashkari's Speech; FOMC Member Brainard's Speech; FOMC Member Evans's Speech; Prime Minister May Speaks
UK retail sales rebounded markedly last month despite the post-Brexit sharp fall in the value of the Pound. The Office for National Statistics reported on Thursday that retail sales surged 2.3% in April, following the preceding month's upwardly revised fall of 1.4% and topping expectations for a 1.2% increase. The unexpected climb suggested that consumer spending also rebounded in April and would support economic growth in the second quarter. Last month's gain was mainly driven by the good weather that boosted demand for hardware and household goods.
Meanwhile, market analysts expected sales volumes to rise 2.1% in the reported month. After the release, the Sterling rose above $1.30 for the first time since September 2016 and hit $1.3028 for a short time. Excluding automobiles, sales rose 2% on a monthly basis in April. Despite April's stronger than expected performance, retail sales are set to drop again in the upcoming months due to surging inflation.
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Upcoming events: FOMC speeches
There are no significant data sets about to be released that could influence the financial markets. However, the calendar is full of other events. In relation to Sterling, Prime Minister Theresa May is set to speach at 18:00 GMT. There are four FOMC member speeches scheduled to occur during Monday's session. First of all at 14:00 GMT Harker will give a speech. Afterwards, at 14:30 GMT, Kashkari will speak publicly. At 23:00 GMT Brainard is set to speak, and, last but not least, Evans will give a speech at 01:10 GMT.
Read More: Fundamental Analysis
GBP/USD trades below weekly PP
On Friday, GBP/USD breached the upper Bollinger band and closed as high as the 1.3042 mark. The Pound opened lower today and has since demonstrated strong downside momentum, dashing through the weekly PP at 1.2985. The next support that the pair is gradually approaching to is formed by the 20-day SMA and the weekly S1 circa 1.2925. This level, however, might be considered unreachable in this trading session, setting 1.294 as the ultimate low. In case the Pound manages to reverse to the upside, the upper Bollinger band should limit the currency from trading higher. May's speech at 18:00 GMT, however, may introduce some corrections in the pair's movement.
Daily chart
In this trading session, the Pound is being strained from below by the 100-hour SMA and the bottom Bollinger band of the hourly chart. The 200-hour SMA is likewise approaching the pair from the downside; thus, it can be assumed that the rate may be pushed higher. However, an hourly SMA might not hold against May's speech scheduled for today.Hourly chart
Read More: Technical Analysis
Bearish sentiment still prevails
Market sentiment remains bearish, as 51% of open positions are short. Meanwhile, 60% of pending orders are to buy the Pound.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 61% of all open positions are short and the remaining 39% are long. Meanwhile, sentiment at Saxo Bank is also bearish, with 57% of traders now being short and the other 43% - long on the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound recovering
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.30 major level, as 66% of survey participants share this belief. While the current price is around 1.30, the average forecast for August 22 is 1.31. The 1.34-1.36 range is now the most popular price interval, having 23% of the votes.