- 53% of all pending orders are to buy the Pound
- 65% of all open positions are long
- 51% of pending orders in 100-pip range are set to buy
- Significant resistance rests circa 1.3104
-
Upcoming Events: US Flash Manufacturing PMI, US Flash Services PMI, US Existing Home Sales
The stronger-than-expected UK retail sales report failed to support the British Pound, as the gain was thought to be related to temporary warm weather effects. At the moment of data release, the Sterling rose 0.20% against the US Dollar to 1.3018. According to forecasts, Britain's retail sales were set to increase just 0.4% in June, but the release beat expectations with a 0.6% rise for the month. The higher volume of sales was supported by solid growth in clothing sales, which offset declines in fuel and food sales. Despite the uptick, the release is unlikely to convince the Bank of England to consider interest rate hike in the near term.
Britain's inflation fell unexpectedly in June from a four-year high reached in the previous month. The Office of National Statistics reported that the country's Consumer Price Index dropped 2.6% year-over-year, missing expectations for an unchanged reading of 2.9%, while the monthly rate slipped from 0.3% to 0.2% in the in June. The Core CPI, which excludes volatile items such as food and fuel, registered a weaker-than-expected reading of 2.4%, following May's 2.6% figure. The surprise fall, mainly driven by lower prices of oil and certain recreational and cultural goods, was partially offset by a rise in prices of furnishings and furniture. The strong decrease in the value of the British Pound after Brexit raised costs of imported goods, suggesting that inflation would show at least 3% pace of growth this year.
Watch More: Dukascopy TV
Day of silence
In terms of fundamentals, this trading week will start with no immense market shakers. However, the United States is still to release three minor data sets for the previous month, namely, Flash Manufacturing PMI and Flash Services PMI at 1345GMT and Existing Home Sales at 1400GMT.
Read More: Fundamental Analysis
GBP/USD surpasses 1.3020 mark
The Sterling has been appreciating against the US Dollar for three days. It reached the 1.3020 mark mid-Friday prior to passing through the 200-hour SMA. The rate managed to recover all losses and surpass from below the 200-, 55- and 100-hour SMAs. Subsequently, the Pound was stranded between the latter two for a brief period of time before large price swings resulted in a push north. Bullish trend indicators are starting to lose ground, suggesting that some downside potential may prevail. This assumption is in line with characteristics of the ascending wedge in which the pair is currently trading. Thus, it is likely that the price goes up for a momentum but then remains relatively stable. A breakout of the 55- and 200-hour SMAs should eventually work as a bearish indication of further momentum down.
Hourly chart
On Thursday, the bearish Pound failed to penetrate the 20-day SMA, thus reversing to the upside next day. The same momentum continues to exist for the second consecutive day, pushing the British currency towards the 1.3050 mark. The closest resistance and support levels are relatively distant, suggesting that intraday technicals could be more valuable resource for valid trading signals.Daily chart
Read More: Technical Analysis/
Market sentiment remains bullish
Bullish sentiment still dominates the market, as 65% of open positions are long, compared to the 63% on Friday. In addition, 53% of pending orders are to buy the Sterling.
In contrast, traders at Saxo Bank are traditionally bearish on the pair, with 63% of traders holding short positions (61% on Friday). Meanwhile, OANDA has changed its bearish sentiment and turned bullish on the pair, as the number of long positions of its clients is 51%.
Spreads (avg, pip) / Trading volume / Volatility