- The number of purchase orders slid from 55 to 48%
- There are 53% of traders holding short positions
- The nearest support is at 1.31
- Immediate resistance is around 1.3160
- 51% of traders reckon GBP/USD will be at 1.30 or higher in three months
- Upcoming events: UK Net Lending to Individuals, US CB Consumer Confidence, GfK Consumer Confidence
The Federal Reserve's favourite measure of inflation held steady in the seventh month of the year, official data revealed on Monday. According to the Bureau of Economic Analysis, the Personal Consumption Expenditures Price Index, excluding the volatile food and energy components, rose 1.6% year-over-year in July, unchanged from last month, while market analysts anticipated a slight decrease to 1.5% in the reported month. On a monthly basis, the core PCE grew 0.1% in July, in line with analysts' expectations and the previous month's reading. The overall PCE advanced 0.8% on a yearly basis in the same month, following June's 0.9% and meeting market forecasts. The data also showed that personal spending climbed 0.3% on a monthly basis in July, down from June's upwardly revised 0.5% gain, whereas personal income jumped 0.4% on the same basis in July, compared to last month's upwardly revised 0.3% hike. Both readings came in line with analysts' projections.
Federal Reserve Chairwoman Janet Yellen left the door open for a hike this year during her speech in Wyoming, arguing that the US economy created a lot of jobs lately and it is on a moderate growth path, despite recent disappointing economic data.
UK Net Lending to Individuals, GfK and CB Consumer Confidences
Among possible market movers today are the UK Net Lending to Individuals, the US CB Consumer Confidence and the GfK Consumer Confidence. The Net Lending to Individuals is released by the BoE and is a measure of growth rates, amounts outstanding and changes in total lending to individuals, divided into lending secured on dwellings and consumer credit. It shows a picture of whether or not consumers are willing to spend money. The US CB Consumer Confidence captures the level of confidence that individuals have in economic activity. A high level of consumer confidence stimulates economic expansion, while a low level drives to economic downturn. The same goes to the GfK Consumer Confidence, except that it regards the UK.
GBP/USD struggles to remain above 1.31
Even though the British currency failed to outperform the American Dollar on Monday, it lost only 13 pips that day, managing to retain its position above the 1.31 mark. The 1.31 level keeps providing psychological support, also bolstered by the 20-day SMA, which could trigger some GBP-buying. Technical indicators are now also in favour of a rally, but the resistance area circa 1.3160, namely the weekly and the monthly PPs, remains strong. In case bulls do prevail, a close at 1.3150 will be the most probable outcome, whereas a bearish development could lead the Cable further down towards 1.3025—where the weekly S1 rests.
Daily chart
On the hourly chart the GBP/USD currency pair has formed a falling wedge pattern, recently confirming the upper trend-line. According to this chart, the bearish momentum is likely to prevail, causing the Cable to drop as low as 1.30. However, risks of an upside breakout are present, as that is how falling wedges usually end.
Hourly chart
Still no consensus
Today there are 53% of traders holding short positions (previously 56%), while the number of purchase orders slid from 55 to 48%.
Indecision appears to be widespread, as the same neutral sentiment is observed among the traders of other brokers. At OANDA, 51% of positions are long and 49% are short. The sentiment at Saxo Bank is now somewhat neutral, as the numbers of longs and shorts each take up 51% and 49% of the market, respectively.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees the GBP/USD below 1.30 in three months
Slightly more than half of traders (51%) believe the British currency is to cost 1.30 or more dollars after a three-month period. The most popular price interval, however, was divided between three price intervals, namely the 1.26-1.28, 1.36-1.38 and 1.38-1.40, each selected by 12% of the voters. The second most popular choices imply that the Sterling is to cost either between 1.24 and 1.26 dollars, or between 1.34 and 1.36 dollars in three months, both chosen by 11% of the surveyed. At the same time, the mean forecast for Nov 30 is 1.3105.