- The portion of buy orders edged up from 39 to 55%
- 56% of traders hold long positions
- The nearest resistance significant resistance is at 1.3238
- Immediate support is at 1.3170
- 54% of traders reckon GBP/USD will be at 1.30 or lower in three months
- Upcoming events: UK Public Sector Net Borrowing, US New Home Sales
Britain's retail sales rose more than expected last month, fresh data from the UK Office for National Statistics revealed on Thursday. The volume of sales increased 1.4% on a monthly seasonally adjusted basis in July, compared to the 0.9% fall see in the previous month, while markets anticipated an increase of 0.1% in the reported month. Year-over-year, retail sales jumped 5.9% in the same month, following June's 4.3% rise and surpassing the 4.1% market forecast. Excluding auto fuel, retail sales grew 1.5% month-over-month in July, up from the 0.9% drop registered in June, whereas economic desks pencilled in a slight increase of 0.1%. On a yearly basis, core retail sales advanced 5.4% in the seventh month of the year, after rising just 3.9% in the preceding month, while analysts expected UK core retail sales to climb 3.6% in July. All sectors posted sales growth in July; however, the majority of the sales growth came from non-food stores rather than supermarkets.
The data covered the four-week period from July 3 to 30 after the United Kingdom voted to leave the European Union; however, analysts suggest that the reaction of the economy may be delayed by a couple of months. Moreover, they assume that the sales growth was driven mainly by the weaker Pound. Following the release, the British Pound jumped 0.4% against the US Dollar and 0.2% against the Euro.
UK Public Sector Net Borrowing is the only driver for the Cable today
Friday is rather uneventful in terms of fundamental economic data releases. The only relevant event is the UK Public Sector Net Borrowing, which is the difference in value between spending and income for public corporations, local and central governments. A higher reading indicates budget deficit, while a negative one – a surplus. According to the forecast, the data is expected to be in Sterling's favour. No further data is due today or on Monday, with the US New Home Sales being due on Tuesday, also being the only driver.
GBP/USD to remain at a two-week high
The Cable managed to post more solid gain on Thursday, being driven by a strong reading of the UK Retail Sales data earlier that day. With no significant drivers present today, the GBP/USD currency pair is expected to undergo a corrective decline, despite having opened right on top of the weekly R2 and the monthly PP support cluster. Technical indicators also support the possibility of the bearish outcome. In this case, the nearest area to limit the losses rests around 1.31 psychological level, also bolstered by the 20-day SMA. A drop lower would imply a retreat from a two-week high, with the weekly R1 at 1.3046 being the next target.
Daily chart
On the hourly chart the GBP/USD currency pair was seen edging higher since the beginning of the week. Moreover, the pair formed a rising wedge, according to which, the exchange rate is likely to keep inching up, as no impetus for a leg down is present.
Hourly chart
Still no consensus
Bulls retreated again, as 56% of traders hold long positions (previously 59%). The portion of buy orders, however, edged up from 39 to 55%.
Indecision appears to be widespread, as the same neutral sentiment is observed among the traders of other brokers. At OANDA, 58% of positions are long and 42% are short. The sentiment at Saxo Bank is now less bullish than before, as the numbers of longs and shorts each take up 52% and 48% of the market, respectively.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees the GBP/USD below 1.30 in three months
Exactly half of traders (54%) believe the British currency is to cost 1.30 or less dollars after a three-month period. The most popular price interval, however, was selected by 16% of the voters, namely the 1.24-1.26, while the second most popular choices imply that the Sterling is to cost either between 1.26 and 1.28 dollars, between 1.28 and 1.30 dollars, between 1.34 and 1.36 dollars, 1.36 and 1.38 dollars or even between 1.38 and 1.40 dollars in three months, all five chosen by 11% of the surveyed. At the same time, the mean forecast for Nov 19 is 1.3066.