- 54% of pending orders in the 100-pip range are to SELL
- 57% of traders are bullish on the Pound (-1%)
- Important resistance area is located circa 1.3140
- Upcoming events: UK CPI y/y, UK PPI Input m/m, UK RPI y/y, BOE Governor Carney and Fed Chair Yellen to speak, US PPI and Core PPI m/m, MPC Member Cunliffe to speak
The Treasury Department stated that the US Federal Government had a deficit of $63B over the course of October, where higher spending was attributed to disaster relief after a hurricane season.
Steven Mnuchin, the US Treasury Secretary, projected that the tax-cut plan is likely to accelerate the US economic growth, which would raise revenue and narrow a fiscal gap. However, higher-than-anticipated deficit highlighted concerns that excess of spending over receipts could increase further.
Abundance of fundamentals
Contrary to Monday, this trading session offers a variety of fundamental events. The day is to start with the British Consumer, Producer and Retail Price Indices for the month of October at 0930GMT.
In addition, four central bank governors are to participate in a panel discussion titled "At the heart of policy: challenges and opportunities of central bank communication" in Frankfurt, Germany, at 1000GMT, including the Fed Chair Janet Yellen and the BOE Governor Mark Carney.
The United States is to release its Producer Price Index and the Core Producer Price Index at 1330GMT.
Finally, the BOE Deputy Governor Jon Cunliffe is due to speak at the Oxford Economics Society at 1730GMT.
GBP/USD spikes to 1.3230 but then drops
As it was expected, recovery of the Pound after rapid fall on Monday was neutralized by a combination of the 55-, 100- and 200-hour SMAs. From the southern direction the same function was exercised by support zone near the 1.3112 mark.
In other words, the cable moved horizontally, anticipating the release of the British inflation data. At the moment, the rating is moving to the bottom, but if the released data beats expectations, market reaction might be large enough to bypass the above moving averages and elevate the rate to the weekly PP at 1.3160.
In the opposite scenario, the sell-off of Sterling might be so active, that the currency rate will pass through the monthly S1 at 1.3072 and stop only near the 0% retracement level at 1.3039 and then resume the plunge towards the bottom edge of large descending channel.
Hourly chart
Downside risks prevailed on Monday, thus sending GBP/USD for a fall down to the 1.3060 mark. However, the pair closed somewhere in the middle, as it failed to remain below the 100-hour SMA located circa 1.3150.
The same bearish momentum is apparent in this session, as well. The Sterling managed to move past the aforementioned moving average and approach the weekly S1 at 1.3091. The most probable trading range for today could be the 1.3070/1.3160 area.
Daily chart
Bulls strengthen their positions
The bullish SWFX market sentiment has slightly weakened on Tuesday, as it is currently standing at 57% (-1%). Pending orders remain at equilibrium for the second consecutive session.
OANDA traders are bullish in this session, as 53% of open positions are long (-2%). Meanwhile, Saxo Bank clients have turned bearish on the pair, as 53% of their positions are short (+3%).