- 56% of pending orders in the 100-pip range are to buy
- 60% of traders are bearish on the Pound
- Important support lies near 1.3500
- Upcoming events: US CB Consumer Confidence, US New Home Sales, FOMC Member Brainard and Fed Chair Yellen to speak
The Sterling strengthened significantly against the US Dollar, as all the main components of the UK retail sales report showed better-than-expected figures for August. After the release, the GBP/USD jumped by 0.67% or 91 base point to touch the daily high of 1.3606 However, by the next couple of hours the pair resumed trading in a weaker area between the 1.3525 and 1.3560 marks.
The most important fundamental event that is likely to shake the given currency pair in this session is the speech by the British Prime Minister Theresa May; the time, however, is still tentative. In addition, there are some minor releases scheduled for today, such as the UK CBI Industrial Order Expectations at 1000GMT and the US Flash Manufacturing PMI and Flash Services PMI at 1345GMT.
Yellen comes in focus on Tuesday
The main fundamental event in today's economic calendar is the speech ‘Inflation, Uncertainty, and Monetary Policy' delivered by the Chair of the Federal Reserve Janet Yellen at the National Association for Business Economic Annual Meeting at 1645GMT.
Before this event, however, there are other data released by the Unites States in this session, namely, the CB Consumer Confidence and New Home Sales for the month of August at 1400GMT. In addition, the Governor of the Federal Reserve Lael Brainard is set to deliver opening remarks at the Federal Reserve Board Conference at 1430GMT.
GBP/USD sneaks below monthly R2 at 1.3485
Although initially the currency pair managed to climb above the weekly PP at 1.3536 that was backed up by the 55- and 100-hour SMAs, but later it failed to strengthen this position and continue the surge.
In result of the two hour downfall, the Pound lost 67 basis points against the Greenback, thus breaking the previously active rectangle pattern whose lower trend-line was represented by the monthly R2 at 1.3485. During this trading session the Sterling might try to restore some of the lost positions, but this attempt is likely to be neutralized by the 200-hour SMA, which is located near the 1.3494 level.
In additional to that, the northern direction also contains the previously mentioned 55- and 100-hour SMAs, which are lying along the upper edge of a supposed new descending channel.
Hourly chart
The Pound eventually managed to breach the strong support of the monthly R2 at 1.3485 on Monday and therefore is gradually moving away from the upper boundary of a long-term channel. As a result, the rate has now been stranded between this newly-formed resistance and the weekly S1 at 1.3413 in this session.
Daily chart
Market sentiment is bearish
The bearish market sentiment has once again taken the upper hand, as the number of short positions on Tuesday is 60% (+1%). Meanwhile, 60% of pending orders are to buy the Pound.
OANDA traders are bearish on the pair, as 63% of open positions are short (-1%). Traders at Saxo Bank are likewise bearish with 69% short positions (+3%).