- 59% of all pending orders are to sell the Pound
- 65% of traders are long the Sterling
- Immediate resistance is at 1.2254
- The closest at is around 1.2234
- Upcoming events: US HPI, US CB Consumer Confidence, BoE Governor Carney Speech
Activity in the US manufacturing sector expanded more than expected last month, according to a private survey published on Monday. The Market Research Group said that its Preliminary Manufacturing Purchasing Manager's Index for the United States jumped to 53.2 in October, following the preceding month's final reading of 51.5 and surpassing the 51.6 market forecast. Any reading above 50 points indicates an expansion and is based on a survey of manufacturers across the country. US manufacturers recorded strongest upturn in business conditions for 12 months in October, while both output and new order growth touched their one-year peaks last month. The US manufacturing sector was hit severely by the US Dollar's sharp appreciation and weak global economic growth. Back in September, the PMI rebounded from a contractionary reading of 49.4, the first drop below the 50 point-level since February. Furthermore, some respondents mentioned there was a rise in international and domestic sales.
After the release, the US Dollar rose slightly against other major currencies, trading at 1.0890 against the Euro, 1.2233 against the British Pound and 104.08 against the Japanese Yen.
US data against Carney's speech
Tuesday is also rather quiet in terms of important economic data releases, but traders could still pay some attention on the US HPI. 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. Generally speaking, a high reading is seen as positive for the USD, while a low reading is seen as negative. Another event will be the US CB Consumer Confidence, which captures the level of confidence that individuals have in economic activity. A high level of consumer confidence stimulates economic expansion, while a low level drives to economic downturn. Moreover, the BoE Governor is scheduled to speak in the second half of the day today, his speech could have a great impact on the Sterling's performance.
GBP/USD trades in murky waters
Even though the Cable currency managed to recover from its intraday losses yesterday, the immediate resistance area still remained intact. Nevertheless, the main outlook is unchanged, with the British currency expected to continue edging lower. The 1.22 psychological level could provide some support, but the bearish momentum is likely to keep prevailing until the 1.2150 level is reached, while the weekly S1 is the target support, located at 1.2138. On the other hand, technical indicators retain mixed signals in all timeframes, and due to lack of solid market movers there is a chance the GBP/USD pair will remain relatively flat for another day.
Daily chart
Due to another day of relatively flat trade, the British pound managed to provide the support line with an additional confirmation yesterday. The hourly chart contradicts with the daily one, as a breach of the 200-hour SMA would establish a solid recovery towards 1.24, thus, realising the channel's upper boundary.
Hourly chart
Traders mostly bullish
Today 65% of traders are long the Sterling (previously 64%), whereas 59% of all pending orders are to sell the Pound (down from 60%).
A similar situation is observed elsewhere. For example, 62% of positions open at OANDA are currently long. This is more than the share of shorts (38%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 64% of traders being long and 36% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect no major changes
By the end of the next three months traders expect the Cable to be higher than the level where it is now. While the current price is around 1.23, the average forecast for January 25 is 1.2541. Furthermore, the 1.18-1.20 and the 1.28-1.30 intervals are now the most popular ones, having 12% of the votes each. On the second place in terms of the votes are the 1.16-1.18 (10%), 1.20-1.22 (10%) and the 1.32-1.34 (10%) intervals. Moreover, 71% all survey participants believe the Cable is to fall under 1.30.