- The share of purchase orders inched up 56 to 65%
- 70% of traders hold long positions
- Immediate resistance is at 1.2320
- The closest support is around 1.2260
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The British unemployment rate hit its lowest level since 1975 in the three-month period to January, while the number of Britons filing for unemployment benefits dropped for the third consecutive month in February. The Office for National Statistics reported on Wednesday that the claimant count fell 11,300 to 734,700, the lowest level since May 1975, last month, following January's downwardly revised decline of 41,400 and surpassing analysts' expectations for a rise of 3,200. The ONS also reported that the unemployment rate dropped to 4.7%, the lowest since the summer of 1975, in three months to January, amid a 31,000 decline in the number of unemployed people.
Meanwhile, analysts expected the rate to remain unchanged from the prior period at 4.8%. On the downside, average earnings rose just 2.2% on an annual basis in January, after climbing 2.6% in the prior month, whereas economists penciled in a 2.4% increase. The ONS senior statistician David Freeman said that even though the unemployment rate hit its lowest since 1975, slow wage growth and surging inflation raised concerns over the health of the UK labour market. After the release, the British Pound rose markedly against the US Dollar, touching its intraday high at 1.2257.
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BoE Meeting Minutes are the main event today
The BoE is to announce its Interest Rate decision today, but no changes are expected. However, the tone of the Meeting Minutes is likely to be the main Sterling driver today. After the meeting a number of US fundamentals is due, but they are expected to have a very limited impact on the Cable at this point.
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GBP/USD in limbo around 1.23
The psychological 1.2150 mark once again successfully provided strong support, causing the Cable to rebound and put the 1.23 major level to the test yesterday. However, the pair was reluctant to maintain trade above 1.23, suggesting that a bearish correction could occur today. The BoE's meeting results could be negative for the Pound today, in which case most of yesterday's gains risk getting erased. Technical indicators are also in favour of the bearish scenario; on the other hand, the Sterling is seen taking another step towards the down-trend at 1.2450 if the BoE is hawkish today. We maintain a relatively positive outlook, with the trend-line expected to be reconfirmed in the near future.
Daily chart
© Dukascopy Bank SA
On the hourly chart no major differences are seen. The 1.22 major level has been pierced yesterday, which was one of the main resistances, as the Cable struggled to stabilise above the 200-hour SMA for quite some time now. Unless we see a strong bearish correction within the next two days, the bullish trend is expected to prevail until another political event pokes the bears with a stick again.Hourly chart
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Traders mostly bullish
There are 70% of traders holding long positions today (previously 68%), while the share of purchase orders inched up 56 to 65%.
A slightly less optimistic situation is observed elsewhere. For example, 64% of positions open at OANDA are currently long. This is more than the share of shorts (36%), more than sufficient for the sentiment to be called bullish. Meanwhile, sentiment at Saxo Bank is also bullish, with 69% of traders now being long and the other 31% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
© Dukascopy Bank SABy the end of the next three months traders expect the Cable to fall under the 1.22 major level, as 54% of survey participants believe so. While the current price is around 1.22, the average forecast for June 16 is 1.2315. The 1.18-1.20 and the 1.20-1.22 ranges are now the most popular price intervals, both having 15% of the votes, while on the second place are 1.14-1.16 and the 1.28-1.30 price ranges, both with 13% of poll participants choosing them. Furthermore, the 1.16-1.18 and the 1.30-1.32 intervals were chosen by 11% of the voters.