- 68% of pending orders in a 100-pip range are to buy the pair
- 65% of traders are bullish on the Pound
- Important support level is located near 1.2970
- Upcoming Events: US Trade Balance, US ISM Non-Manufacturing PMI
The GBP/USD exchange rate rose quite a bit in the wake of slightly weaker Britain's Services PMI data. However, the Sterling accelerated gains against the US Dollar after the UK inflation report hearings and continued reflecting bullish sentiment in the pair.
Markit reported that its PMI for Britain's services sector declined more than estimated to the 53.2 mark in August, reaching the lowest level since September 2016. The slowdown suggested muted growth in new orders, as lingering uncertainty and weak confidence caused delays in decisions on spending. Overall business expectations were upbeat, though further concerns surrounding the UK political and economic outlook remained on the table.
Main event – US ISM Non-Manufacturing PMI
The economic calendar for this session is empty for the UK. However, US is to publish monthly data on Trade Balance at 1230GMT. This event is classified as having intermediate effect on the market. The main release on Wednesday is the Non-Manufacturing PMI by the US Institute for Supply Management at 1400GMT.
GBP/USD gains 0.8%
Shortly after a release of information on the UK Services PMI the Pound got a strong upside momentum and in the upcoming seven hours advanced by 0.8% against the Greenback. Most probably, the surge was based not only on this fundamental event but also on a combined effect from the 200-hour SMA and the lower support line of a rising wedge. But contrary to patterns theory, the currency pair managed break through the upper edge of an ascending channel that was additionally protected by the weekly R1 at 1.3015. After such extensive surges the exchange rate usually enters into a calm horizontal movement for some time and then the counter currency tries to restore some lost positions. Most likely today the buck will try to do the same, using an effect from the US ISM Non-Manufacturing.
Hourly chart
Upside risks prevailed on Tuesday in the result of which the Pound shot up 95 pips against the US Dollar and closed at 1.3034. The pair has been stranded between the weekly R1 and R2 in this session. It seems that the rate has started a new up-wave that could guide the pair higher in the intermediate term.
Daily chart
Bullish sentiment deteriorates
The bullish market sentiment dominates the market, with 65% of open positions currently being long (+2%). Meanwhile, the number of pending orders stands at 56% to buy the Pound (+4%).
OANDA traders have turned slightly bearish on the pair, as 51% of open positions are short. Furthermore, traders at Saxo Bank are likewise bearish with 63% short positions (+3%).