- 64% of pending orders in a 100-pip range are to buy the pair
- 67% of traders are bullish on the Pound
- Significant support lies circa 1.2860
- Upcoming Events: UK Net Lending to Individuals m/m, US ADP Non-Farm Employment Change, US Preliminary GDP q/q, FOMC Member Powell speaks
As it expected, the Sterling slightly appreciated against the Greenback after announcement of the UK Second Estimate GDP. Unfortunately, afterwards the Pound made two failed attempts to break above the northern boundary of a senior descending channel. Such outcome confirms that the pair should continue to move in the downward direction. However, the speech delivered by Janet Yellen later this day might turn around the rate and dissolve the current formation.
The combination of the UK economic reports contributed to the initial fall of the GBP/USD, though losses were offset immediately. The Sterling weakened against the US Dollar by 20 base points or 0.16% to rebound from the 1.2785 mark and continue moving upward. The Office for National Statistics reported that the preliminary estimate for the Britain's economic growth in the June quarter was confirmed at 0.3% in line with the previous release. The GDP figures revealed that the UK economy expanded at the slowest pace amongst the G7 this year, as the Brexit uncertainty caused dampening business investment, which missed expectations being flat in the reported period. Meanwhile, the weaker Pound hurt consumer spending more than supported exporters.
Busy day for USD traders
The main fundamental events in this session are the US ADP Non-Farm Employment Change and Preliminary GDP for the previous quarter at 1215GMT and 1230GMT, respectively. In addition, the UK is to release monthly Net Lending to Individuals at 0830GMT which is labelled as an event of intermediate importance. Finally, the day will end with the speech of the Federal Reserve Governor Jerome Powell at Large-Bank Directors Conference at 1315GMT.
GBP/USD returns to 1.2926
Yesterday the given pair moved quite similarly to the Euro and gold. The first half of the day it spent in a surge but, after reaching certain point, changed a direction and started to decline until the 55-hour SMA. Today, the Pound faces the same dilemma as the bullion. On the one hand, it might try once again to break through a combination of the weekly R1 and the monthly S1. However, an easier path would be to continue the downfall towards the 100-hour SMA. It seems that yesterday the pair made a rebound from an upper trend-line of a new medium-term ascending channel. If this is true, then the further plunge seems even rational. But there is also a need to take into account an effect from another release of the US data today.
Hourly chart
Contrary to expectations, the Pound was unable to close with gains on Tuesday. The given move confined the pair between the 55- and 100-day SMAs in a narrow trading range on Wednesday morning. The upper boundary is limited by a strong resistance formed by the 55- and 20-day SMAs, the monthly S1 and the bottom wedge boundary. This suggests that the rate may not be able to surpass this level and consequently push south.
Daily chart
Market sentiment slightly bearish
The bullish GBP/USD sentiment dominates the market, as 67% of open positions are long (-2%). Meanwhile, pending orders are almost at equilibrium with a 1% prevalence of bears.
OANDA traders have turned slightly bearish on the Pound, as 51% of open positions are short (+3%). In addition, traders at Saxo Bank share this bearish sentiment, with the number of short positions standing at 61% (-1%).