- 54% of pending orders in the 100-pip range are to sell the pair
- 53% of traders are bullish on the Pound
- Important resistance level lies near 1.3350
- Upcoming events: UK MPC Official Bank Rate Votes, UK Monetary Policy Statement, UK Official Bank Rate, UK Asset Purchase Facility, UK MPC Asset Purchase Facility Votes, US CPI m/m, US Core CPI m/m, US Unemployment Claims
The Sterling continued an upmove in the Wednesday morning, though previous gains were partially offset after the disappointing report on the UK average earnings. After the drop of 0.13% against the Greenback the British Pound resumed depreciation to fall below the 1.3245 level.
The Office for National Statistics reported that both its Average Earnings Indexes including and excluding bonuses showed the same as previously annual increase of 2.1% in the three months period ended in July. On the positive side, data revealed that unemployment rate in the UK edged lower to 4.3% in the reported term, while analysts' anticipated an unchanged reading of 4.4%. The release muted expectations for the Bank of England to change its interest rate policy due to a higher inflation.
British Monetary Policy Summary
As apparent on the economic calendar, this trading session is marked by significant fundamentals from both the UK and the US. The Bank of England is to draw all trader attention during the morning when it is to release the Official Bank Rate, the Official Bank Rate Votes and the Monetary Policy Summary by the British Monetary Policy Committee (MPC) at 1100GMT. In addition, the Asset Purchase Facility and its votes by MPC are likewise released at the same time. Meanwhile, the United States is set to publish the Consumer Price Index (CPI) and the Core CPI for the month of August, as well as the weekly Unemployment Claims at 1230GMT.
GBP/USD anticipates BoE decision
As it was expected, a mismatch with experts' forecasts on the UK Average Hourly Earnings forced the pair to make a premature rebound and retreat towards the closest combined support level formed by the 100-hour SMA and the monthly R1 at 1.3208. However, over the last ten hours the exchange rate did not make any significant moves. The reason behind such low volatility is anticipation of announcement of the Official Bank Rate by the Bank of England. Most probably, this event will lead to quite sharp depreciation of the Pound. In the first hour the downfall might be stopped by a combination of the 200-hour SMA and the weekly PP at 1.3110. However, then the pair is likely to slip even further, tending to reach the weekly S1 and the monthly PP near 1.2990.
Hourly chart
Despite testing the weekly R1 at 1.3311 on Wednesday morning, the strong bearish sentiment sent the Pound for a 71-pip daily plunge. The rate, however, managed to remain above the monthly R1. This session is marked by low volatility, as traders are relatively calm before BoE's decision. This fundamental event is likely to determine the rate's movement for the following hours or even the whole trading day. The upside is restricted by the aforementioned weekly R1, while the bottom barrier is set by the 38.2% Fibo.
Daily chart
Bullish sentiment deteriorates
SWFX market sentiment has slightly strengthened on Thursday, as the number of long positions is 53% (+1%). Meanwhile, 55% of pending orders are to buy the Pound.
On the other hand, OANDA traders remain bearish on the pair, as 58% of open positions are short (unchanged from Wednesday). Traders at Saxo Bank are likewise bearish with 63% short positions (-3%).