- 53% of all pending orders are to buy the Pound
- 65% of SWFX traders are bullish on the pair
- 54% of pending orders in 100-pip range are to buy
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Upcoming Events: UK CBI Industrial Order Expectations, US HPI m/m, US CB Consumer Confidence, US Richmond Manufacturing Index, MPC Member Haldane Speaks
The stronger-than-expected UK retail sales report failed to support the British Pound, as the gain was thought to be related to temporary warm weather effects. At the moment of data release, the Sterling rose 0.20% against the US Dollar to 1.3018. According to forecasts, Britain's retail sales were set to increase just 0.4% in June, but the release beat expectations with a 0.6% rise for the month. The higher volume of sales was supported by solid growth in clothing sales, which offset declines in fuel and food sales. Despite the uptick, the release is unlikely to convince the Bank of England to consider interest rate hike in the near term.
Britain's inflation fell unexpectedly in June from a four-year high reached in the previous month. The Office of National Statistics reported that the country's Consumer Price Index dropped 2.6% year-over-year, missing expectations for an unchanged reading of 2.9%, while the monthly rate slipped from 0.3% to 0.2% in the in June. The Core CPI, which excludes volatile items such as food and fuel, registered a weaker-than-expected reading of 2.4%, following May's 2.6% figure. The surprise fall, mainly driven by lower prices of oil and certain recreational and cultural goods, was partially offset by a rise in prices of furnishings and furniture. The strong decrease in the value of the British Pound after Brexit raised costs of imported goods, suggesting that inflation would show at least 3% pace of growth this year.
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Minor releases prevail
Minor data releases prevail in this session, being published from both the UK and the US. The day will start with UK CBI Industrial Order Expectations at 1000GMT. Subsequently, the US is to publish monthly House Price Index and Richmond Manufacturing Index at 1300GMT and 1400GMT, accordingly. The greatest significance, however, is put on consumer confidence by the Conference Board at 1400GMT. Finally, this session will end with BOE Chief Economist Andy Haldane's speech about the international monetary and financial system in London.
Read More: Fundamental Analysis
GBP/USD stable on Tuesday morning
After breaching the weekly PP at 1.3019, GBP/USD tried to push above the 1.3060 mark. This attempt was unsuccessful which led to the rate re-testing the aforementioned level on several occasions. Technical indicators suggest that bearish sentiment may prevail in this session. However, the Pounds faces a strong support cluster formed by the 200-, 100– and 55-hour SMAs circa 1.3001. This area has to be surpassed in order to continue approaching the bottom wedge boundary. In case the pair fails to do so, it is likely that the British currency reaches the weekly R1 at 1.3104 by Wednesday morning.
Hourly chart
Tuesday's morning session demonstrated indecisiveness of traders that resulted in low volatility. This indicates that yesterday's upside momentum has allayed. Taking into account intraday technical signals, it is likely that the same situation continues during the whole session. The most probable trading range could be 1.3000/1.3050.Daily chart
Read More: Technical Analysis/
Market sentiment remains bullish
Bullish sentiment still dominates the market, as 65% of open positions are long - a level unchanged from Monday. In addition, 53% of pending orders are to buy the Sterling.
In contrast, traders at Saxo Bank are traditionally bearish on the pair, with 64% of traders holding short positions (63% on Monday). Meanwhile, OANDA has changed its bearish sentiment and turned bullish on the pair, as the number of long positions of its clients is 52%.
Spreads (avg, pip) / Trading volume / Volatility