- 58% of pending orders in the 100-pip range are to SELL
- 58% of traders are bearish on the Sterling (+4%)
- Strong support circa 1.3970
- Upcoming events: Average Earnings on Wednesday and GDP's on Friday
As the US Dollar continued to lose value against the rest of the financial markets, the GBP/USD currency exchange rate has surged and reached the 1.40 mark. Although the currency exchange rate had gained significant ground during the last trading sessions, the appreciation of the Pound against the Greenback is not about to end.
Britain's shop sales depreciated by more than anticipated in December, confirming the weakest yearly growth in retail in four years, as consumer spending remained limited due to Brexit-hit prices.
The Office for National Statistics revealed that the volume of retail sales fell 1.5% from November, reversing a 1.0% increase registered in the prior month. Meanwhile, the Bank of England anticipated the squeeze on consumers to ease this year, as inflation calms down and pay growth accelerates.
UK data on Wednesday
In regards to the fundamental data releases, which might affect the GBP/USD currency pair, there are two days to remain alerted.
On Wednesday pay attention to the publication of the UK employment data, where the Average Earnings Index will be the top data set to watch. The data release is set to occur at 09:30 GMT.
Meanwhile, on Friday there will be even more important events. In the morning, at 09:30 GMT the UK Preliminary GDP will be published. At 13:30 GMT the US Advance GDP will be released. Both of these releases are of the utmost priority, as these are the first data sets of GDP in a row of three month releases.
All of the mentioned data releases will be covered live by Dukascopy analysts on the bank's live webinar platform.
GBP/USD breaches psychological level of 1.40
The Pound remained relatively stable against the US Dollar yesterday. The pair edged lower during the first part of the day; however, the strong support of the bottom channel line and the 55-hour SMA circa 1.3930 stopped any attempts to edge lower.
Subsequently, bulls took the upper hand and sent the Pound for a test of the most junior channel near 1.4035. Meanwhile, converging technical indicators suggest that the bullish sentiment might be exhausted, thus allowing for a correction south within the following trading hours.
This scenario would return the rate back in the senior channel towards the weekly R1 and the 55– and 100-hour SMAs near 1.9350. In case the weekly R2 is breached, this high level is not expected to hold for long, as the Sterling should eventually be forced lower.
Hourly chart
The daily chart reveals a lot more than previously thought. Namely, the currency exchange rate has passed a massive scale ascending channel pattern's resistance line. Moreover, the currency pair has reached above the last monthly resistance pivot level.
Daily chart
The SWFX sentiment remains bearish today, as 58% of traders are holding short positions (+4%). Meanwhile, pending orders are also bearish, as 52% of orders are set to sell.
The bearish sentiment of OANDA traders has increased by three percentage points with 59% short positions. Saxo Bank clients share the same sentiment with 67% short positions for the third consecutive session.
Spreads (avg, pip) / Trading volume / Volatility