- 69% of pending orders in the 100-pip range are to SELL
- 52% of traders are bullish on the Sterling
- Strong support area circa 1.4120
- Upcoming events: US ADP Non-Farm Employment Change. US Employment Cost Index q/q, US Chicago PMI, US Pending Home Sales m/m, FOMC Statement, Federal Funds Rate
The US consumer spending strengthened in December amid higher demand for services and goods, though an increase came at the cost of savings, which fell to the lowest level in 10 years in a worrying sign for future economic growth and consumption.
The report indicated that the PCE Price Index, the Federal Reserve's preferred measure of inflation, increased 0.2% in December after a 0.1% gain. Meanwhile, consumer spending added 0.4% in the reported month from an upwardly revised 0.8% in November.
Busy session
Only fundamentals scheduled for this session come from the United States. It will release data on ADP Non-Farm Employment Change, Employment Cost Index, Chicago PMI and Pending Home Sales at 1315GMT, 1330GMT, 1445GMT and 1500GMT, respectively. In addition, the Federal Reserve is to publish its statement and the Federal Funds Rate at 1900GMT.
GBP/USD recovers previous losses
Upside risks prevailed in the market on Tuesday, thus allowing GBP/USD to end the session with a 74-pip advance. The pair experienced a brief period of consolidation after breaching the 55-hour SMA and the weekly PP, but eventually managed to dash through the 100-hour moving average, as well.
In accordance with technical indicators, there is still some upside potential that could push the rate towards the 1.4250 mark where the bottom boundary of the breached four-week channel is located. However, their high positioning suggests that this expected movement up is unlikely to be sustainable for the whole session.
Meanwhile, the southern barrier is guarded by several noteworthy support levels. In case no fundamentals breach this area, the Pound should remain trading near 1.4150 by Wednesday morning.
Hourly chart
GBP/USD has remained near the 1.42 mark for the fifth consecutive session. Technical indicators on the daily chart are generally bearish, thus pointing to a possible decrease in the medium term.
Daily chart
SWFX market sentiment has turned bullish today, as 52% of traders are now holding long positions, compared to 53% bearish on Tuesday. Meanwhile, 53% of pending orders are still to sell the Pound (-4%).
The bearish sentiment of OANDA traders has weakened to 53% of all open positions being short. Saxo Bank clients share the same sentiment with 59% short positions (+4%).
Spreads (avg, pip) / Trading volume / Volatility