- 55% of pending orders in the 100-pip range are to SELL
- 59% of traders are bullish on the Sterling (+1%)
- Gains could be capped near 1.41
- Upcoming events: FOMC Members Dudley and Williams to speak
The Sterling fell sharply against the US Dollar, after the report by Markit on the UK services industry. The GBP/USD exchange rate decreased 24 base points or 0.17% to the 1.4123 mark and continued to decline.
Britain's economy revealed notably slower growth in January with the recent survey casting doubts on stronger investors' expectations that the Bank of England was about to raise rates in the following months. IHS Markit released its survey showing that the UK economic growth is likely to slow to 0.3% in the Q1, after a 0.5% gain in the last quarter of 2017. The weakening was mostly triggered by the country's dominants services industry, where activity growth decreased to the lowest level in 16 months of 53.0 in January.
Quiet session
This trading session is expected to be relatively calm, as only two speeches by FOMC members are on agenda. The President of the Federal Reserve Bank of New York William Dudley will speak about banking culture at a joint Thomson Reuters / the European American Chamber of Commerce event at 1330GMT; while his counterpart in San Francisco John Williams is due to speak at a community leaders luncheon at 2230GMT.
GBP/USD returns near 1.40 mark
The Sterling was fluctuating in a narrow range between the monthly PP and the 38.20% Fibo retracement on Tuesday morning. It then made two notable leaps in both directions, but nevertheless returned within the aforementioned trading range.
As apparent from the pair's movement yesterday, the Pound tried to breach the 1.40 area for several hours; however, the combined resistance of the monthly PP, a two-week trend-line and the weekly S1 limited any movement above this psychological level. Thus, it is likely that this sessions does not bring any significant changes to the overall price level.
In case the 1.40 mark is breached, the 1.41 area should be the ultimate high for today, while the weekly S2 could limit losses below the 1.3829.
Hourly chart
The Pound continues to weaken against the US Dollar for the fourth consecutive session. The strong downside movement has allayed considerably during the past two days, thus pointing to a brief prevalence of bulls. However, it should be noted that the pair faces a strong resistance cluster on the hourly chart that could limit gains in this session.
Daily chart
SWFX market sentiment remains bullish today, as 59% of traders are holding long positions, compared to 58% on the previous session. Meanwhile, 55% of pending orders are still to sell the Pound (-3%).
The bearish sentiment of OANDA traders has weakened to 59% of all open positions being short (-2%). Saxo Bank clients share the same sentiment with 59% short positions (remains unchanged).
Spreads (avg, pip) / Trading volume / Volatility