- 55% of pending orders in the 100-pip range are to BUY
- 59% of traders are bullish on the Pound (+2%)
- Nearest resistance lies near 1.3150
- Upcoming events: US Average Hourly Earnings m/m, US Non-Farm Employment Change, US Unemployment Rate, MPC Member Haldane and FOMC Members Dudley and Kaplan to speak
The British Pound strengthened against the Greenback on the grounds of shiny UK service industry data. Following the report, the GBP/USD currency pair jumped 22 base points to the 1.3278. However, by the end of the session the pair returned to the prior lows near the 1.3230 area, confirming that the sentiment concerning the Sterling's outlook stayed more downbeat amid lingering uncertainties over Brexit talks.
Markit report showed that the Britain's services sector grew at a stronger-than-anticipated pace in September, putting the industry's PMI to a seasonally adjusted 53.6, above forecasts for an unchanged reading. The strong data could ease concerns over the UK economy and support expectations for the Bank of England's interest rate hike.
US in focus on Friday
The Unites States is to release three important data sets for the month of September at 1230GMT, namely, the Average Hourly Earnings, the Non-Farm Employment Change and the Unemployment Rate.
In addition, three speeches by central bankers are expected today. The BOE Chief Economist Andy Haldane is due to speak about public trust in institutions at the Royal Society for the encouragement of Arts, Manufactures and Commerce. In addition, the President of the Federal Reserve Bank of New York is to present ‘The Monetary Policy Outlook and the Importance of Higher Education for Economic Mobility' at 1615GMT, while the President of the Federal Reserve Bank of Dallas Robert Kaplan is to participate in a panel discussion at the Investing in America's Workforce Conference at 1645GMT.
GBP/USD falls from descending channel
In line with expectations, traders used the 55-hour SMA as a benchmark to push the rate in the southern direction.
The main role in the yesterday's downfall played a release of better than expected US employment data as well as Govern Powell's and the BOE MPC Members' McCafferty and Haldane speeches. Because of a quite sharp depreciation of the Pound against the Dollar, the pair not only fell from a descending channel, but also crossed the 38.2% retracement level at 1.3145.
The fact that the average market sentiment remains 59% bullish and the fact that 55% of traders are willing to purchase the Sterling suggests that the pair is likely to make a rebound either from the weekly S3 at 1.3078 or from an area near the psychological 1.30 level.
Hourly chart
Downside risks pushed the Pound below the weekly S2 and the 38.2% Fibonacci retracement on Thursday, thus closing the session below the 55-day SMA. As a result, the rate was positioned between this mark and the 100-day SMA on Friday morning.
Technical indicators demonstrate that the Sterling might still go lower within the upcoming week, but it could eventually halt near the monthly S1 at 1.2985 and reverse to the upside.
Daily chart
Market sentiment at balance
SWFX market sentiment is increasingly bullish on Friday, as the number of long positions is 59% (+2%). In addition, 51% of pending orders are to buy the Pound (-6%).
Meanwhile, OANDA traders remain bearish on the Pound, as 53% of open positions are short (-1%). Traders at Saxo Bank have decreased their bearish perspective with 59% short positions (-5%).