GBP/USD - PRICES, CHARTS, AND ANALYSI
In early European trading, the British Pound is experiencing a rise against the US dollar. The primary factor behind this trend is the weakness of the USD. Analysis of last Friday’s US NFP report indicates that the American job market is currently strong, with an unemployment rate slightly above a recent multi-year low of 3.5%. According to the latest predictions from CME fed fund futures, it appears that markets anticipate a final rate hike of 25 basis points at the May FOMC meeting before pausing the current hiking cycle.
The forthcoming US inflation report (March) is scheduled for release on Wednesday (13:30 UK), with a projected decrease in the annual headline inflation rate from 6% to 5.2%. The anticipated increase in core inflation is estimated to be marginal, at 0.1%, bringing it up to 5.6%.
On Wednesday, the minutes of the March FOMC meeting will be made public. This is expected to provide the market with additional insights into the Fed’s stance on inflation and its forecast for interest rates going forward.
The recent US Nonfarm Payroll report, released on Friday, indicates that the labor market in the United States continues to thrive. According to the report, 236,000 new job positions were created in the previous month, aligning with projections made by industry experts. Additionally, the unemployment rate decreased by 0.1%, reaching a new low of 3.5%.
The current trading value of GBP/USD is approximately 1.2435, reflecting an increase of nearly 0.5% during the session. The pair is in close proximity to an established resistance line around 1.2450, which has been a persistent challenge over recent months. The presence of positive readings across all three moving averages indicates favorable conditions for upward momentum. Successfully surpassing the aforementioned resistance level would activate a subsequent target at 1.2525, followed by a potential multi-month high at 1.2667.
GBP/USD DAILY PRICE CHART – APRIL 11, 2023
A BIG SHIFT IN WEEKLY RETAIL POSITIONING
According to data gathered from retail traders, 46.42% of them have a net-long position in the market, resulting in a short-to-long trader ratio of 1.15 to 1. The percentage of traders with a net-long position has increased by 5.21% since yesterday and by 35.02% since last week, whereas the percentage of traders with a net-short position has decreased by 6.59% since yesterday and by 26.22% since last week.
Our approach towards crowd sentiment is generally contrary, and the present net-short status of traders implies that prices of GBP/USD may persist in their current upward trend. However, the number of traders who are net-short has decreased compared to yesterday and last week. Recent alterations in sentiment indicate that the current trend in GBP/USD prices may soon reverse lower, even though traders are still net-short.