- The portion of orders to sell the Pound edged lower from 65 to 56%
- 52% of all open positions are short
- The weekly PP forms support at 1.4563
- Resistance is around 1.4710, represented by the Bollinger band and the weekly R1
- 59% of traders reckon GBP/USD will be at 1.44 or higher in three months
- Upcoming events: US Markit Manufacturing PMI, US ISM Manufacturing PMI, US Construction Spending
The Sterling ended the previous week with losses against most major peers, although some gains were registered against most commodity currencies and the Buck. The Pound added 0.27% versus the Aussie, while remaining almost completely unchanged against the Loonie and the US Dollar, up by 0.01% and 0.02%, respectively. At the same time, the GBP/NZD pair sustained a 0.21% decline, while slumping 0.68% against the Swiss Franc and 0.84% against the Euro. At the same time, the Japanese Yen managed to add 1.48% against the British currency, having retained its post-BoJ meeting strength.
The Fed's favourite inflation barometer slowed in March, falling from one-and-a-half-year peak, while consumer spending ebbed. The price index for personal consumption expenditures excluding food and energy ticked up 0.1% in March, following a revised 0.2% gain. The rate of inflation over the past 12 months slid to 1.6%. In the previous two months, the core deflator was growing 1.7% year-on-year, the quickest pace since mid-2014. Inflation is being restrained by a strong Dollar and cheaper energy. A tightening labour market also failed to generate strong wage gains, contributing to moderate consumption growth. In March, consumer spending, which accounts for more than two-thirds of US economic activity, ticked up 0.1% after an upwardly revised 0.2% gain in February. Consumer spending is expected to pick up momentum as wages steadily rise. Personal income increased 0.4% in March after nudging up 0.1% in February.
Meanwhile, confidence among America's shoppers worsened for the fourth consecutive month in April. The Thomson Reuters/University of Michigan preliminary consumer confidence index decreased to 89.0 points in April, down from the final 91.0 reported in March, when it had dropped to a fresh five-month low. The current economic conditions sub-index improved to 106.7, while the indicator tracking future expectations declined 4.8 points to 77.6 during the reported month.
US Manufacturing PMI and US Construction Spending
Among important economic events today the US Markit Manufacturing PMI is one of the most important ones. Released by the Markit Economics, it captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic conditions in the US. A reading above 50 implies the economy is expanding, making investors understood it as a bullish for the USD, whereas a result below 50 points for an economic contraction, and weighs negatively on the currency. Another event is the US Construction Spending, released by the US Census Bureau, it is an indicator that measures the total amount of spending in the US on all types of construction. The residential construction component is useful for predicting future national new home sales and mortgage origination volume.
GBP/USD attempts to climb over 1.46
The GBP/USD currency pair remained relatively unchanged on Friday, with the pair edging only 5 pips higher over that day. The Cable is expected to continue climbing higher today, with the nearest resistance located only around 1.4710. However, there is insufficient impetus for a rally that high today, with price likely to close near the 1.4650 mark. Technical indicators are giving bullish signals, bolstering the possibility of the positive outcome. On the other hand, the Sterling also risks remaining below the 1.46 major level, with the closest area to limit the losses being the weekly PP at 1.4563.
Daily chart
The GBP/USD continued to trade closer to the ascending channel's lower border on Friday, even making attempts to pierce the support line. Even though the Pound opened with a small bearish gap, it might be sufficient to maintain trade below the trend-line.
Hourly chart
Sentiment at perfect equilibrium
Today 52% of all open positions are short, compared to 54% on Friday. Meanwhile, the portion of orders to sell the Pound edged lower, namely from 65 to 56%.
At OANDA market sentiment reached a perfect equilibrium today, with only 50% of their open positions being long, compared to bulls outnumbering the bears by only one percentage point on Friday. Meanwhile, the sentiment at SAXO Bank remains bearish, with 55% of their traders holding short positions (previously 63%).
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.44 in three months
The majority of traders (59%) believe the British currency is to cost 1.44 or more dollars after a three-month period. The most popular price interval was selected by slightly more than a quarter (28%) of the voters, namely the 1.44-1.46 one, while the second most popular choice implies that the Sterling is to cost between 1.46 and 1.48 dollars in three months, chosen by 18% of the surveyed. At the same time, the mean forecast for May 02 is 1.4368.