- 51% of all pending orders are to sell the Sterling
- 62% of traders are long the Pound
- Immediate resistance is around 1.2545
- The closest support is at 1.2515
- Upcoming Events: US Crude Oil Inventories, US HPI, UK Preliminary GDP, US Jobless Claims, US New Home Sales, US Markit Services PMI
Britain's Supreme Court ruled on Tuesday that the UK Prime Minister Theresa May must get parliamentary approval to trigger Article 50 of the Lisbon Treaty and begin the country's two-year withdrawal from the European Union. David Neuberger, Britain's most senior judge and the leader of the Supreme Court, reported judges voted 8-3 to reject the Government's appeal. Theresa May repeatedly said she would trigger the EU divorce clause by the end of March but she will now have to seek permission from MPs to kick-start the process of leaving. However, the majority of lawmakers stated they would not stop the block the breakup process, which was supported by 52% of Britons. The Brexit Secretary David Davis said the Government is planning to introduce a fast-track Bill in Parliament to begin the process of leaving the EU within next few days, adding that MPs are expected to vote on the legislation as early as next week.
Separately, the Office for National Statistics reported British public sector borrowing dropped to a seasonally adjusted 6.4 billion pounds in December, slightly below analysts' expectations for 6.7 billion pounds. In the meantime, the November figure was revised down from 12.2 billion pounds to 10.8 billion pounds.
US HPI and UK Preliminary GDP
Wednesday is a relatively quiet day, as there are no significant economic data releases scheduled for today. However, the US HPI could have some impact, as it provides an estimated value of housing market conditions. It is an important indicator as the housing market is considered as a sensitive factor to the US economy. Furthermore, on Thursday attention should be paid to the UK GDP data, as it shows the monetary value of all the goods, services and structures produced within a country in a given period of time. GDP is a gross measure of market activity, because it indicates the pace at which a country's economy is growing or decreasing. This GDP reading is the first one, so it tends to have the most impact.
GBP/USD struggles to maintain trade above 1.25
Tuesday ended relatively pleasant for the British currency, being that it managed to erase most of intraday losses yesterday. Wednesday also brings some positive news, as technical indicators now suggest the GBP/USD currency pair is to edge higher. Moreover, within the next few weeks we should see a potential buy signal, when the 55-day SMA crosses the 100-day one to the upside. At the moment, however, the Cable could continue undergoing a correction, meaning that a close in the red zone is possible. The main target at this point is the resistance cluster around 1.2680, which could limit the Sterling's capability of posting further gains against the US Dollar.
Daily chart
The Cable has been trading in a clear up-trend since the beginning of the previous week. The trend-line has been confirmed several times now, with the latest one occurring today. This contradicts with the daily outlook, suggesting the GBP/USD is to keep appreciating.
Hourly chart
Traders mostly bullish
For the seventh time in a row market sentiment weakened. Today 62% of traders are long the Pound, compared to 66% on Tuesday.
A slightly less optimistic situation is observed elsewhere. For example, 59% of positions open at OANDA are currently long. This is more than the share of shorts (41%), barely sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 54% of traders being long and 46% 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 53% of survey participants believe so. While the current price is around 1.23, the average forecast for April 25 is 1.2229. However, the 1.14-1.16 interval is now the most popular one, having 20% of the votes, while on the second place are the 1.18-1.20. 1.20-1.22 and 1.22-1.24 price ranges, with 11% of poll participants choosing them. Furthermore, the 1.30-1.32 interval was chosen by 10% of the voters.