- Retail sector is 65% bullish on the pair
- 57% of pending orders in the 100-pip range are set to sell
- US Retail Sales on Wednesday and UK Retail Sales on Thursday
On Wednesday, the GBP/USD continued to decline. Moreover, the currency rate was preparing to reach for the next support level at the 1.2660 mark.
The Greenback strengthened against the British Pound, following the United Kingdom Consumer Price Index release on Wednesday at 08:30 GMT. The GBP/USD currency pair lost 11 pips, or 0.08%. Right after the data release the main currency pair had a significant downtrend, but luckily, the main currency pair recovered itself to continue fluctuating in the 1.2710 area.
The Office for National Statistics released Consumer Price Index data that came in line with expectation of 2.5%. This is considered the UK's most important inflation data because it's used as the central bank's inflation target, which means that it is important for traders to follow this data to stay aware of currency valuation because rising prices lead the central bank to raise interest rates.
The senior economist at the Institute of Directors, Tej Parikh, said: "For households this isn't good news, as the already weak growth in their pay packets is being further eroded by high prices. This is likely to weigh down consumer spending, posing fresh problems for embattled high street businesses ".
US and UK data is incoming
On Wednesday there will be data sets being released that will influence the financial markets through the strength of the US Dollar. Namely, the US Retail Sales and Core Retail Sales data sets will be published at 12:30 GMT.
The event's cover will begin at 12:20 GMT on the Dukascopy live webinar platform. Meanwhile, note that at 12:00 GMT the weekly fundamental event review webinar will take place.
In addition to that, on Thursday morning, at 08:30 GMT the UK Retail Sales will be released. The cover of the release will start at 08:20 GMT.
GBP/USD passes support levels
The Pound started to consolidate against the US Dollar on Friday. This restricted the pair in the 1.2740/1.2800 range for four trading sessions.Following a test of the 100-hour SMA on Tuesday, bears nevertheless managed to push the pair below its four-day support down to 1.27. This mark has worked successfully as support/resistance since November, 2016. This fact should increase upside risks, thus resulting in appreciation away from GBP/USD's one-year low.
The nearest resistance is the monthly S2 and the 55– and 100-hour SMAs circa 1.2770. Solid data releases could push the pair above this level and towards the breached channel line and the weekly PP at 1.2840.
Conversely, a strong fall should is unlikely to occur in this session with the daily low being located near 1.2660.
Hourly Chart
By looking at the daily chart, one can notice that the currency exchange rate took a pause from a decline and is clearly resuming it.
In regards to the medium and long term future, the decline is set to pause time from time, as the currency exchange rate's decline is highly likely going to find short term support in the various monthly and weekly pivot point levels.
Daily chart
SWFX traders remain bullish today on the GBP/USD pair, as 65% of open positions were LONG during the morning hours.
However, additional long positions are unlikely going to be open. Retail traders of the Swiss Foreign Exchange for the second day have set up 59% of all of their pending trade orders to sell.
Meanwhile, OANDA traders remain largely bullish, as 66% of open positions are long at the brokerage. In the meantime, traders at SAXO Bank are 64% long on the GBP/USD pair.
It can be deducted from all of the sentiment information that not only the short term traders, but also long term positions are long. There can be various reasons for such sentiment. Namely, some are expecting a surge after the recent decline and some took advantage of the recent surge. However, during the recent trading sessions all of the open long positions have created only losses.
Spreads (avg, pip) / Trading volume / Volatility