- The share of purchase orders inched down from 60 to 56%
- 51% of all open positions are short
- Immediate resistance is around 1.3028
- The closest support rests at 1.2985
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Upcoming Events: Markit Services PMI, Markit Manufacturing PMI, US New Home Sales
On Monday, the British Prime Minister Theresa May had an interview with the BBC channel's Andrew Neil. The interviewer asked the UK Prime Minister why the Conservative Party included a social care cap in its campaign, while it refused to do so at the very beginning of the rally, but May said she was honest with the nation and just wanted to clarify what the Party put in its manifesto. During the interview, the British PM stated that people wanted to see the stronger economy that could pay for the National Health Service and the public services. As to rising inflation, frozen in-work benefits and falling living standards, the UK PM said she would create higher paid jobs and put control on energy prices to help people pay bills.
Andrew Neil noted that the Tories failed to lower migration and end the budget deficit by 2015; however, Theresa May stated that the Conservatives would continue working on the following issues if they wing the June 8 Election, highlighting the Labour Party's intentions to increase borrowing and ignore the country's debt and the budget deficit.
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Upcoming events: US New Home Sales, Markit Services and Manufacturing PMIs
Today's attention turns to the US fundamentals, such as the Markit Services and Manufacturing PMIs, as well as the New Home Sales. The Markit Manufacturing PMI captures business conditions in the manufacturing sector; as the manufacturing sector dominates a large part of total GDP, the given PMI is an important indicator of business conditions and the overall economic condition in the US. As for the Services PMI, it captures business conditions in the services sector, which also dominates a large part of total GDP and, therefore, is an important indicator. The New Home Sales is an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes, so as a result, the demand for goods, services and the employees is stimulated.
Read More: Fundamental Analysis
GBP/USD attempts to prolong consolidation
Monday ended with the Sterling remaining completely unchanged against the US Dollar, with the pair attempting to return into its consolidation trend's borders. In order for this to be confirmed the British Pound is required to close in the red zone today, below the weekly pivot point as well. The second closest support lies only around 1.2930, formed by the 20-day SMA and the weekly S1. However, technical indicators suggest the bullish momentum is likely to prevail; in case it does, the Cable is likely to reach the 1.31 mark within the next two weeks.
Daily chart
The Cable continued to trade within the borders of the ascending channel pattern on the hourly chart, providing an additional confirmation of the resistance line yesterday. Consequently, the pair is now likely to keep edging lower and reach the channel's support line. The 200-hour SMA is an obstacle on the Cable's path, which has already caused a U-turn earlier than expected, thus, should be considered as a possible turnaround point.Hourly chart
Read More: Technical Analysis
Bearish sentiment still prevails
Traders are still neutral towards the Pound, holding 51% of short and 49% of long positions. At the same time, the share of purchase orders inched down from 60 to 56%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 61% of all open positions are short and the remaining 39% are long. Meanwhile, sentiment at Saxo Bank is also bearish, with 60% of traders now being short and the other 40% - long on the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound recovering
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.30 major level, as 64% of survey participants share this belief. While the current price is around 1.30, the average forecast for August 23 is 1.3089. The 1.34-1.36 range is now the most popular price interval, having 23% of the votes, while on the second place is the 1.32-1.34 interval, with 15% of the voters choosing it.