- 56% of all pending orders are to buy the Pound
- 57% of all open positions are long
- The possible downside limit rests at 1.2903
- Significant support rests circa 1.3036
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Upcoming Events: UK Current Account, UK Final GDP q/q, US Core PCE Price Index; US Personal Spending; US Chicago PMI; US Revised UoM Consumer Sentiment
The US economy expanded at a stronger-than-initially-expected pace in the March quarter amid higher consumer spending. The Commerce Department reported on Thursday that the domestic economy grew at an annualised pace of 1.4% in the Q1 of 2017, following the preceding quarter's expansion of 2.1% and surpassing the prior estimate of 1.2% growth. Thursday's data showed that the Q1 growth figure's revision was driven by stronger consumer spending, which climbed 1.1% during the reported period, compared to the preliminary reading of a 0.6% increase. However, that was the weakest reading since the Q2 of 2013.
Despite the GDP upward revision, the Trump administration's plan to lift annual US economic growth to 3% remained challenging. As to the June quarter, weak retail sales figures, sluggish manufacturing production growth and low inflation suggested that the economy failed to regain positive momentum in the Q2. Other data released on Thursday showed that the number of Americans filing for jobless aid rose 2K to 244K in the week ended June 23, whereas analysts anticipated a fall to 241K.
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Main focus – UK Current Account
The main focus in this trading session is put on UK's Current Account data released at 0830 GMT, thus having the biggest influence on the pair. Additionally, the UK is set to publish Final GDP q/q together with Current Account. Furthermore, the economic calendar is full of minor data releases from the United States, such as Core PCE Price Index and Personal Spending at 1230 GMT; Chicago PMI at 1345 GMT and Revised UoM Consumer Sentiment at 1400 GMT. These data, however, are not considered to be immense market shakers.
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GBP/USD: decrease in sight
Thursday's trading session was characterized by strong upside momentum that was stopped by the monthly R1 near the 1.3036 mark. The given direction reveals the formation of a minor ascending channel that would suggest a fall down to the 55-hour SMA or the monthly PP at 1.2938 and 1.2903, accordingly. Even though technical indicators remain bullish, trend indicators demonstrate that the given up-trend is decreasing in strength, thus confirming a possible move south in this session. On Monday morning, however, the rate may return near the 1.3000 if the channel-up boundaries are respected. By and large, the rate is expected to trade in the 1.3036/1.2903 area. Being so close to the upper channel boundary means that positive UK Current Account data may breach the upper limit for a while.
Hourly chart
As apparent from the daily chart, the Pound has been stranded by the monthly R1 and PP for the second consecutive day. The pair is trading near the former; however, lack of upside momentum demonstrates that traders are reluctant to cross this border. Intraday technical indicators suggest that the given level should not be surpassed in this session, favouring possible depreciation of the Sterling. There is no immediate support until the abovementioned monthly PP on the daily time-frame that may restrict a fall in case bears prevail.Daily chart
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Bearish sentiment prevails
SWFX traders are bullish on the pair, as 57% of all open positions are long (58% on Thursday). In addition, 56% of set up orders are to buy the Pound.
On the contrary, traders at Saxo Bank are bearish on the Sterling, with 67% of traders holding short positions (64% previously). In addition, OANDA clients share the same bearish sentiment, with 62% of open positions being short.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound falling
© Dukascopy Bank SAThe majority of traders believe that the Cable is to fall below the 1.28 mark three months from now, as 54% (-3%) of survey participants share this belief. The current spot price is around 1.3013, while the average forecast for September 29 is 1.2791 (1.2771 on Thursday). The 1.24-1.26 range still remains the most popular price interval, having 24% of the votes.