The economic data for the U.S. and UK are still a mixed bag at
best. Last week, market research group Markit said its UK
manufacturing purchasing managers' index (PMI) fell to 51.5 in
August, down from 51.9 in July, while the August services PMI
dropped to 55.6 from a reading of 57.4 in July. Analysts had
expected the services index to rise to 57.6 in August. For the
index, a level above 50.0 indicates expansion in the industry,
below 50.0 indicates contraction.
As of September 8, there are 39,446 short positions of British
pound sterling (CME:6B), traded on the Chicago Mercantile
Exchange (CME), by leveraged funds, a week-over-week increase of
7,718 short positions. This is compared to about 53,722 long
positions, down 14,569 from the previous week, according to the
Commitment of Traders (COT) data released by the Commodity
Futures Trading Commission (CFTC) each Friday.
Hedge funds have decreased their net long positions about 22,287
contracts from the previous week, where British pound sterling
contracts are traded in units of 62,500 GBP. The reduction in
the net long positions reflected the GBP/USD price movement last
week.
Technically, the GBP/USD has been trading in a symmetrical
triangle, a trading band, between 1.515 and 1.581 dollars per
British pound since late April. Although a golden cross was
triggered at the end of June, where the 50-day SMA crosses above
the 200-day SMA, the indicator seems to be unreliable as the
currency pair still struggled within the trading range.
The direction in which the cable will be heading next could well
depend upon the Federal Reserve rate hike decision on September
17. Concerns about China’s economic hard landing and turmoil
in global financial markets, which have sent the Japanese yen
skyrocketing, could return after the Federal Reserve meeting. |