- 51% of all pending orders are to sell the Pound
- 58% of traders hold long positions
- Immediate resistance is at 1.2478
- The closest support is around 1.2430
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Upcoming Events: US Core PCE Price Index, US Personal Spending & Income, Chicago PMI, Michigan Consumer Sentiment
The US economy expanded at a stronger than initially expected pace during the final quarter of 2016 amid higher consumer spending. The Commerce Department reported on Thursday the economy grew at a 2.1% annualised rate in the Q4 of 2016, compared to the previously estimated 1.9% pace. Nevertheless, for all of 2016, the economy expanded just 1.6%, the slowest pace of growth since 2011, following a 2.6% expansion in 2015. Moreover, the most recent economic indicators suggested that economic growth slowed further in the Q1 of 2017. According to the Atlanta Fed, the US economy expanded at a 1.0% rate in the Q1.
However, economists claim that US employment data is more reliable than output data, as it paint a clearer picture of national income growth. Thursday's data also showed consumer spending advanced 3.5% during the last quarter of 2016, up from the initially reporter 3.0% growth rate. Furthermore, domestic demand climbed 3.4% in the Q4 of 2016, the fastest pace of growth in two years, as imports posted a 9.0% jump, the biggest since the Q4 of 2014. Other data released on Thursday revealed that initial jobless claims dropped 3,000 to a seasonally adjusted 258,000 in the week ending March 25, remaining below the 300,000 level for 108 consecutive weeks.
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US data in focus again
Once again all focus is on the US fundamentals. First of all, the Core PCE Price Index, which is an average amount of money that consumers spend in a month. "Core" excludes seasonally volatile products, such as food and energy, in order to capture an accurate calculation of the expenditure. It is also a significant indicator of inflation. Second, the US Personal Income. It measures the total income received by individuals from all sources, including wages and salaries, interest, dividends, rent, workers' compensation and transfer payments. This figure can provide insight on the US employment situation. As for Personal Spending, it measure purchases of goods and services by households and by non-profit institutions that serve households from private business.
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GBP/USD stuck between 1.24 and 1.26
The British Pound found support in front of the 55 and 100-day SMAs yesterday, but was unable to fully breach the immediate resistance cluster. Although technical studies keep suggesting the GBP/USD pair is to edge higher and the 55-day SMA is on the verge of crossing the 100-day one to the upside, the potential bullish development is unlikely to exceed the 1.2550 mark. The weekly R1 at 1.2558 is to prevent the Cable from rising further in case bulls do prevail today, but downside risks are still present, with political factors continuing to weigh on the Sterling.
Daily chart
© Dukascopy Bank SA
The Pound appears to have bottomed out at 1.2380, as it began slowly climbing back up against the US Dollar. However, the 200-hour SMA is providing some resistance, refusing to allow the Cable to maintain trade above it for an extended period of time. A strong market driver is required for the Sterling to exit its current ‘prison'.Hourly chart
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Traders mostly bullish
There are 58% of traders holding long positions today (previously 59%), whereas 51% of all pending orders are to sell the Pound, compared to 56% on Thursday.
A slightly less optimistic situation is observed elsewhere. For example, 51% of positions open at OANDA are currently long. This is more than the share of shorts (49%), but not sufficient to call the sentiment bullish, instead it is neutral. Meanwhile, sentiment at Saxo Bank is also quite close to equilibrium, with 56% of traders now being long and the other 44% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
© Dukascopy Bank SABy the end of the next three months traders expect the Cable to fall under the 1.22 major level, as 52% of survey participants believe so. While the current price is around 1.26, the average forecast for June 31 is 1.2251. The 1.30-1.32 range is now the most popular price interval, having 16% of the votes, while on the second place is the 1.14-1.16 price range, with 14% of poll participants choosing it. Furthermore, the 1.18-1.20 and the 1.26-1.28 intervals were each selected by 12% of voters.