- The share of sell orders dropped from 69 to 53%
- 58% of all open positions are long
- The nearest resistance is located around 1.3485
- Support is at 1.3180
- 61% of traders reckon GBP/USD will be at 1.36 or lower in three months
- Upcoming events: UK Manufacturing PMI, UK Services PMI, US Markit Manufacturing PMI
British retail sales dropped markedly in June after two consecutive months of growth, official figures from the Office for National Statistics (ONS) showed on Thursday. The volume of retail sales declined 0.9% month-over-month on a seasonally adjusted basis in June after rising 0.9% in May, while market analysts anticipated a decrease of 0.4%. Compared with a year earlier, last month's sales grew 4.3%, following May's downwardly revised reading of 5.7% and falling behind analysts' expectations of a 5.0% rise. The June deceleration was mainly driven by lower sales of clothing and footwear which dropped 1.8% on a monthly basis and 6.1% on an annual basis. The adverse weather was seen as the main contributor to the following fall, as most of the data was collected before the June 23 EU referendum. Excluding auto fuel, retail sales declined 0.9% moth-over-month, although climbed 3.9% year-over-year in the reported month.
Separate data from the ONS showed that UK public sector net borrowing dropped to 7.31 billion pounds in June from the previous month's upwardly revised reading of 9.41 billion, whereas economists predicted an increase to 9.20 billion.
UK Manufacturing and Services PMI, as well as US Manufacturing PMI to be today's market movers
Today the UK Manufacturing PMI is due. It is released by both the Chartered Institute of Purchasing & Supply and 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 condition in UK. Another important data release is the UK Services PMI. It captures an overview of the condition of sales and employment. It is worth noting that the UK service sector does not influence, either positively or negatively, the GDP as much as the Manufacturing PMI does. Traders want the highest possible reading as that will be taken as positive for the GBP. Later today also the US Manufacturing PMI is due, which captures 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 condition in the United States.
GBP/USD attempts to remain above 1.32
The GBP/USD currency pair remained relatively unchanged yesterday, having inched only 24 pips higher, amid mixed UK fundamental data results. However, the Cable opened on top a relatively strong support, represented by the 20-day SMA and the weekly PP, which should keep the Pound elevated. Even with better-than-expected fundamentals today, the UK currency is unlikely to climb over the 1.34 major level, leaving the immediate resistance around 1.3485 intact. On the other hand, we should not rule out the possibility of the bearish development prevailing, due to technical indicators in the daily timeframe giving bearish signals. The key bottom target is the 1.31 psychological level.
Daily chart
Since the GBP/USD currency pair managed to breach the three-day down-trend, it has been gravitating towards the 200-hour SMA. According to the hourly chart and the giving passively bullish trend the Cable is likely to remain unchanged, but with risks skewed to the downside.
Hourly chart
Bulls remain in control
Today 58% of all open positions are long, compared to 57% yesterday. Meanwhile, the share of sell orders dropped from 69 to 53%.
Compared to Thursday, there are slightly less bulls at OANDA - they take up 53% of the positions open with the Canada-based broker. Sentiment at Saxo Bank remains somewhat neutral, as here the number of bears exceeds the number of bulls by only 2 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.36 in three months
More than half of traders (61%) believe the British currency is to cost 1.36 or less dollars after a three-month period. The most popular price intervals was selected by only 18% of the voters, namely the 1.28-1.30 one, while the second most popular choice implies that the Sterling is to cost between 1.24 and 1.26 dollars in three months, chosen by 16% of the surveyed. At the same time, the mean forecast for Oct 22 is 1.3341.