- 57% of pending orders in the 100-pip range are to BUY
- 53% of traders are bullish on the Sterling
- Strong support area circa 1.4160
- Upcoming events: UK Construction PMI, US Average Hourly Earnings m/m, US Non-Farm Employment Change, US Unemployment Rate, US Revised UoM Consumer Sentiment, FOMC Member Williams to speak
The ISM Manufacturing PMI release had not prevented a lingering up-move in the EUR/USD exchange rate. The pair added 10 base points to grow further to the 1.2520 level.
The US manufacturing activity weakened in January due to a decrease in new orders, though an unexpected fall in the number of Americans filing for unemployment aid last week indicated lingering job market strength, which could underpin bolster domestic demand. The ISM stated that the US Manufacturing PMI decreased to 59.1 in January from 59.3 in the prior month. The other data showed notable gains in construction spending. Meanwhile, a decrease in worker productivity pointed to more difficult maintenance of strong expansion pace.
British Construction PMI, US Employment Data
Friday's trading session is start with the British Construction PMI for January at 0930GMT.
The rest of this session is reserved for fundamentals from the US, such as the monthly Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate and Revised UoM Consumer Sentiment. The first three are to be released at 1330GMT, while the last one – at 1500GMT.
This session will end with the President of the Federal Reserve Bank of San Francisco John William who is due to speak about the US economic outlook at the Financial Women of San Francisco luncheon.
GBP/USD on way to reach 1.43
The British Sterling was driven by upside risks on Thursday, thus being able to appreciate 75 pips against the US Dollar. This session, however, was market by low volatility slightly below the post-Brexit-vote high of 1.4213.
This northern barrier is expected to hold strong, resulting in a southward pressure towards the 100– and 200-hour SMAs near 1.4157 today. The 55-hour moving average which was located in between the current price and the aforementioned area in the morning could likewise hinder the pair for several hours.
In general, the prevailing ascending channel is expected to surrender, thus allowing the Pound to approach the monthly PP and the 38.20% Fibo retracement at 1.3953. A steeper fall during the following sessions would confirm a double-top-like formation.
Hourly chart
Following three days of appreciation against the US Dollar, the Sterling is starting to show signs of decreased bullish sentiment. Thus, it is likely that this trading week is closed in the red area. In general, the pair remains stranded between the weekly R1 and PP, as no additional support/resistance levels are apparent on the daily chart.
Daily chart
SWFX market sentiment remains bullish today, as 53% of traders are holding long positions for the second consecutive session. Meanwhile, pending orders are at equilibrium, compared to 54% to sell the Pound on the previous day.
The bearish sentiment of OANDA traders has strengthened to 58% of all open positions being short. Saxo Bank clients share the same sentiment with 64% short positions (+5%).
Spreads (avg, pip) / Trading volume / Volatility