- The share of sell orders returned to its Wednesday's level of 52%
- 69% of all open positions are long
- Immediate resistance is at 1.2440
- The closest support is at 1.2324
- Upcoming Events: UK Retail Sales, US President-Elect Trump's Speech
The unemployment rate in Britain held steady last month, while the number of unemployment benefit claims declined, surpassing analysts' expectations. Official data published by the Office for National Statistics on Wednesday showed claims for unemployment aid dropped 10,000 in December, while economists anticipated a gain of 2,500. Though the number of female claimants was 600 higher than men. The November rate was revised down to 1,300 from the originally reported 2,400. Meanwhile, the unemployment rate remained unchanged at its 11-year low of 4.8%, matching market forecasts. However, the number of employed people dropped 52,000 to 1.6 million in the three month period to November, the lowest level since 2006. The ONS also reported the Average Earnings Index increased 2.8% year-over-year. The reading slightly topped economists' expectations for an increase of 2.6%. Excluding bonuses, earnings advanced 2.7%, the largest gain since mid-2015.
The earnings figure is closely followed by the Bank of England since the Brexit vote. According to the latest inflation forecasts, the current average earnings growth is unlikely to significantly boost inflation, though the weakening labour market is likely to cut consumer spending, harming the economy's growth outlook.
Trump's Speech in focus
Friday brings only one relevant data release to influence the GBP/USD pair, namely the UK Retail Sales. They measure the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. The Core Retail Sales, however, exclude fuel. Nevertheless, the most impact is expected to be from US President-Elect Trump's Speech. His comments have previously strengthened the US Dollar at some point, while also having a negative effect when no hints concerning some policy details were provided. His inauguration speech brings a lot of uncertainty to the markets and for USD pairs specifically.
GBP/USD in limbo ahead of Trump's inauguration
The GBP/USD currency pair confirmed yesterday's scenario, having climbed back above the 1.23 major level and even completely ignoring the immediate resistance at 1.2324. Friday brings a lot of uncertainty, as volatility direction is likely to be caused by Trump's speech during his inauguration later today. From a technical perspective we should see more upside movement, despite a group of strong resistances located just beyond the 1.24 handle. On the other hand, the US Dollar could receive a solid boost, with the Cable seen dropping as low as 1.21 in the worst case scenario.
Daily chart
As it was mentioned previously, Trump's speech is the main driver today. Everything depends on whether investors will be satisfied with what they hear. The 200-hour SMA is unlikely to limit the losses should those occur, while there is nothing preventing the Cable from rallying.
Hourly chart
Traders mostly bullish
Bulls keep retreating, as 69% of all open positions are now long (previously 71%). At the same time, the share of sell orders returned to its Wednesday's level of 52%, down from 55% on Thursday.
A slightly less optimistic situation is observed elsewhere. For example, 63% of positions open at OANDA are currently long. This is more than the share of shorts (37%), barely sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 61% of traders being long and 39% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
By the end of the next three months traders expect the Cable to fall under the 1.22 major level, as 56% of survey participants believe so. While the current price is around 1.23, the average forecast for April 20 is 1.2181. However, the 1.14-1.16 interval is now the most popular one, having 18% of the votes, while on the second place is the 1.18-1.20 price range, with 16% of poll participants choosing it. Furthermore, the 1.16-1.18 and the 1.20-1.22 intervals were each chosen by 11% of the voters.