- The portion of buy orders remains unchanged at 56%
- Bulls and bears take up 51% and 49% of the market
- Key demand area is at 1.2891/1.2879
- The closest resistance is around 1.31
- Upcoming events: MPC Member Shafik Speech, US Durable and Core Durable Goods Orders, Fed Chair Yellen Testimony, US Crude Oil Inventories, FOMC Members Bullard and George Speeches
Confidence among American shoppers rose unexpectedly to its highest level since the recession in September, official data revealed on Tuesday. According to the Conference Board, the Consumer Confidence Index (CCI) jumped to 104.1 in September, whereas market analysts expect it to come in at 98.6 in the reported period. Meanwhile, the preceding month's reading was revised up to 101.8 from the originally reported 101.1 points. The survey is a closely-followed barometer of consumer attitudes towards business conditions, personal finances, jobs and short-term outlook. The data showed that 27.9% of respondents stated that jobs were plentiful in the ninth month of the year, following August's 26.8%.
Furthermore, only 21.6% claimed that jobs were hard to find, compared to last month's 22.8%. The share of those expecting more jobs to be created in the upcoming months increased to 15.1% from last month's 14.4%, while the share of respondents expecting less jobs declined to 17.0% from August's 17.5%. The proportion of respondents expecting their incomes to worsen fell to 10.3% from 11.0% in the prior month. The US economy is mostly driven by consumer spending, which accounts for about 70% of all economic growth.
US Durable Goods Orders and Yellen's testimony
Wednesday brings a number of events that could potentially influence the GBP/USD pair. First of all, the US Durable Goods Orders, which measure the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more. Such as motor vehicles and appliances. As those durable products often involve large investments they are sensitive to the US economic situation. The final shows the state of US production activity. The Core data, however, excludes the transport sector. Another important event is Yellen's testimony later today. As head of the central bank, which controls short-term interest rates, she has more influence over the country's currency value than anyone else. The testimony is expected to provide insight on the US economic situation and the possible December interest rate hike.
GBP/USD attempts to stabilise above 1.30
The GBP/USD pair surprised with its performance yesterday, having recovered from intraday lows and retaken the 1.30 level. However, technical studies keep suggesting the Cable is to edge lower. Today's US fundamental data could be the catalyst for a possible decline, in which case the main support will still be the cluster around 1.2880. Taking into account that the Sterling persistently remained above the 1.2950 level for more than a week, another bullish development would not be a surprise. Technically, the 1.31 major level should be the upper border, but 1.3150 is not out of the question either.
Daily chart
The GBP/USD pair continued to edge higher on Tuesday, approaching the descending channel's resistance line. Technically, the pair should bounce back, as the trend-line is reinforced by the 200-hour SMA, making supply even stronger. Once the pair makes a U-turn, the bearish momentum is likely to last at least until 1.28 is reached.
Hourly chart
Traders remain undecided
Market sentiment almost reached a perfect equilibrium, with bulls and bears taking up 51% and 49% of the market, respectively. Meanwhile, the portion of buy orders remains unchanged at 56%.
A different situation is observed elsewhere. For example, 72% of positions open at OANDA are currently long. This is more than the share of shorts (28%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 66% of traders being long and 34% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect no major changes
By the end of the next three months traders expect the Cable to be more or less at the same level where it is now. While the current price is around 1.30, the average forecast for December 28 is 1.3156. Interestingly enough, however, the 1.30-1.32 interval is not the most popular one, having only 11% of the votes. Most of the votes are concentrated in 1.28-1.30 (17%) intervals. Furthermore, 54% all survey participants believe the Cable is to remain above 1.30.