- 54% of all pending orders are to buy the Pound
- 63.60% of all open positions are long
- 57.50% of pending orders in 100-pip range are set to sell
- Significant resistance rests circa 1.3008
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Upcoming Events: Day of silence
The stronger-than-expected UK retail sales report failed to support the British Pound, as the gain was thought to be related to temporary warm weather effects. At the moment of data release, the Sterling rose 0.20% against the US Dollar to 1.3018. According to forecasts, Britain's retail sales were set to increase just 0.4% in June, but the release beat expectations with a 0.6% rise for the month. The higher volume of sales was supported by solid growth in clothing sales, which offset declines in fuel and food sales. Despite the uptick, the release is unlikely to convince the Bank of England to consider interest rate hike in the near term.
Britain's inflation fell unexpectedly in June from a four-year high reached in the previous month. The Office of National Statistics reported that the country's Consumer Price Index dropped 2.6% year-over-year, missing expectations for an unchanged reading of 2.9%, while the monthly rate slipped from 0.3% to 0.2% in the in June. The Core CPI, which excludes volatile items such as food and fuel, registered a weaker-than-expected reading of 2.4%, following May's 2.6% figure. The surprise fall, mainly driven by lower prices of oil and certain recreational and cultural goods, was partially offset by a rise in prices of furnishings and furniture. The strong decrease in the value of the British Pound after Brexit raised costs of imported goods, suggesting that inflation would show at least 3% pace of growth this year.
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Day of silence
A release of information on the UK Retail Sales and the ECB Minimum Bid Rate caused a great anxiety in the markets yesterday. For this reason, the last day of this trading week will pass quietly, with no other macroeconomic data releases that might the given currency pair.
Read More: Fundamental Analysis
GBP/USD encounters new resistance level
Despite the fact that a released information on the UK Retail Sales beat experts expectations, the Pound lost 0.6% in value against the American Dollar and fell below the weekly PP at 1.3008 as well as the 200-hour SMA near the 1.2968 level. For this reason, the pair is expected to spend this Friday in attempts to recover the lost ground. Nevertheless, the road upstairs most probably will be blocked by a new combined resistance level formed by a combination of the 55-hour SMA and the above weekly PP. In addition, a rebound at this point would return the pair into a short-term inner descending channel and, thus, move it closer to the bottom channel-line of the dominant ascending pattern.
Hourly chart
Closure of the evening Thursday session showed that the currency pair left an attempt to slide down to a combined support set up by the 55-day SMA together with the weekly PP at 1.2882. Instead, it made a rebound from the 20-day SMA and took the opposite direction, which highlights an existence of an abrupt wedge. For this reason, an upcoming week the pair is expected to spend in a rise to the channel's upper trend-line.Daily chart
Read More: Technical Analysis/
Market sentiment remains to be bullish
The bullish market sentiment still dominates this currency pair, as 63% of open positions are long, compared to the 52% on Thursday. Nevertheless, only 54% of pending orders are to buy the Sterling.
In contrast, traders at Saxo Bank are traditionally bearish on the pair, with 61% of traders holding short positions (60% on Thursday). Besides, 53% of OANDA clients also hold short positions.
Spreads (avg, pip) / Trading volume / Volatility