- 52% of pending orders in the 100-pip range are to BUY the Sterling
- SWFX market sentiment is 66% bullish (+3%)
- Upcoming fundamental events: British Services PMI, MPC Member Cunliffe to speak, ISM Non-Manufacturing PMI
SMAs are likely to impact the Pound in this session.
The British Pound strengthened against the Greenback, following UK Construction PMI data release on Monday. The GBP/USD currency pair gained only three pips, or 0.02%, to continue going up afterwards.
The Markit released Construction Purchasing Managers' Index data that came out a little bit better-than-expected, however stayed unchanged from the previous period of 52.5.
"Higher prices for fuel, raw material shortages, higher labor costs combined with slow delivery times were further obstacles to growth as firms nervously assessed their workforce for much-needed talent and sub-contractors could name their price," said Tim Moore, Senior Economist at IHS Markit and author of the Markit/CIPS Construction PMI.
Two important data releases
Tuesday's trading session will start with the British Services PMI at 0830GMT. The ISM Non-Manufacturing PMI is released later in the day at 1400GMT.
GBP/USD points to bearish move
The Pound was relatively steady against the US Dollar early on Monday. This lack of direction changed mid-session when the pair fell 73 pips and consequently breached the 55– and 200-hour SMAs. Further decline was stopped by the 100-hour moving average and the weekly PP at 1.3305.This level was surrendered early today, thus pointing to continuous bearish potential. Technical indicators support this scenario. The nearest support is set by the bottom boundary of a one-week channel at 1.3280. This mark might not hold strong which should then result in a test of the weekly S1 at 1.3250.
In case the three SMAs are breached to the upside, gains are likely to be capped at 1.34 where strong resistance is apparent on both the 1H and 4H time-frames.
Hourly chart
The Sterling has plunged 7.28% against the US Dollar since mid-April. Despite lingering near the 200-day SMA for a couple of days, downside risks prevailed and pushed the rate as low as the 1.3245 last week.
As apparent on the chart, the Pound has started to recover from its six-month low. This appreciation is expected to continue during the following two weeks, as well. The nearest significant resistance is the 61.80% Fibonacci retracement and the 200-day SMA near 1.36.
Daily Chart
The bullish SWFX market sentiment is increasingly bullish with 66% of open positions being long today (+3%). Likewise, 52% of pending orders are to buy the Pound.
The market sentiment of OANDA traders is strongly bullish, as 72% of them are holding long positions (+2%). Saxo Bank clients are likewise bullish with 70% long positions (+11%).
Spreads (avg, pip) / Trading volume / Volatility