- 63% of pending orders in the 100-pip range are to SELL
- 53% of traders are bearish on the Sterling (-2%)
- Strong resistance circa 1.42
- Upcoming events: US Core PCE Price Index m/m, US Personal Spending m/m
The Sterling jumped against the Dollar, after the preliminary Britain's GDP report showed that the country's economy accelerated growth pace more than anticipated by the end of 2017. The GDP/USD exchange rate picked up 19 base points or 0.14%, but fell back initially to continue gradual decline.
The UK economic growth strengthened in the December quarter of 2017, with the report showing that Brexit continued to weigh on the economy, but not as dramatically as feared. Britain's GDP grew 1.8% year-over-year in the Q4, at the weakest pace since 2012, compared with 1.9% expansion in the year of 2016. The data added to expectation for the BoE to raise rates later in May, but not in February.
Minor fundamentals
Two sets of fundamentals are scheduled for this session, namely, the US Core PCE Price Index and the US Personal Spending for December to be released at 1330GMT. These events, however, are unlikely to affect the market in any way.
GBP/USD points to soon decline
Similarly to other major currencies, the Pound retrieved from its recent highs against the US Dollar and edged lower on Friday. It breached the 55-hour SMA and was testing the longer-term moving average and the weekly PP circa 1.4120 on Monday morning. This level coincides with the bottom boundary of a three-week ascending triangle which has constrained the pair's recent period of appreciation.
Meanwhile, this trading session started with low volatility, as bears were reluctant to breach the nearest support. This area, however, is expected to surrender, thus allowing the Pound to approach the 200-hour SMA located near the 1.40 mark. The pair is likely to remain in the 1.4050/1.4100 range by Tuesday morning.
Hourly chart
Despite high volatility, the Pound closed the session on Friday with a slight 23-pip advance. The pair started this week with no massive changes to its price level. However, the slight tendency downwards together with technical indicators does suggest that bears could be the dominant force this week.
Daily chart
The bearish SWFX sentiment has slightly weakened today, as 53% of traders are holding short positions (-2%). Meanwhile, 62% of pending orders are now to sell the Pound.
The bearish sentiment of OANDA traders has increased by one percentage point with 59% short positions. Saxo Bank clients share the same sentiment with 55% short positions (-2%).
Spreads (avg, pip) / Trading volume / Volatility