- 56% of pending orders in the 100-pip range are to BUY
- 58% of traders are bullish on the Pound (+2%)
- Important resistance area is located circa 1.3150
- Upcoming events: FOMC member Evans to speak
The stronger-than-anticipated report on the UK manufacturing production resulted in a modest increase of the British Pound. The GBP/ USD exchange rate added 6 base points and moved higher to be seen trading near the weekly high of 1.3221. However, the pair returned to the 1.320 area to reveal a narrow-range side move on early Monday.
The Office for National Statistics said that the UK manufacturing and industrial output both rose 0.7% over the course of September, where each sector revealed the fastest growth pace since last year's December. However, a sharp decrease in construction and lingering squeeze on British households' incomes indicated that the UK economy would face difficulties as Brexit approaches.
Quiet session
This session is going to be quiet in terms of fundamentals. The only event that should be mentioned is a speech "The future of Odyssean and Delphic guidance" by the President of the Federal Reserve Bank of Chicago Charles Evans early on Tuesday at 0805GMT.
GBP/USD spikes to 1.3230 but then drops
A release of better than expected growth rate of the UK Manufacturing Production created an upside momentum that enabled the pair to return back to the 1.3228 level. However, then fears of growing political risk in Britain and Trump's participation in the ASEAN summit strengthen the buck and dragged the exchange rate to support area near the 1.3120 mark.
On the one hand, the further road to the bottom is obstructed by the lower support line and the 23.6% Fibonacci retracement level. However, if the current bearish pressure continues this barrier may not sustain. In that case, the cable is going to test the next support zone lying around the weekly S1 at 1.3090.
It should be noted that recovery of the Pound also looks unlikely, due to pressure from the falling 55-, 100- and 200-hour SMAs.
Hourly chart
The Sterling keeps fluctuating near the same level for the third week. However, the overall movement is nevertheless to the downside.
In this session, the pair was driven by strong downside pressure. It opened slightly above the weekly PP but was subsequently pushed down to the monthly S1 at 1.3074. It is unlikely that the rate falls even lower.
Thus, the bearish momentum should allay within the following trading hours. The rate could be located at the 100-day SMA circa 1.3120 by the end of the day.
Daily chart
Bulls strengthen their positions
The bullish SWFX market sentiment has strengthened by two percentage points on Monday, as it is currently standing at 58% (+2%). Meanwhile, pending orders are at equilibrium.
OANDA traders are bullish in this session, as 55% of open positions are long (+1%). Meanwhile, the number of open positions of Saxo Bank stands at equilibrium, as there are both 50% long and short positions.