- The portion of sell orders dropped lower from 61 to 57%
- 71% of all open positions are long
- Immediate resistance is around 1.2330
- The closest support is at 1.2184
- Upcoming Events: US JOLTS Job Openings, UK Manufacturing Production, UK Goods Trade Balance, UK Construction and Industrial Outputs, UK NIESR GDP Estimate, US Crude Oil Inventories
British house prices climbed for the second consecutive month in December, driven by a shortage of affordable homes. According to the UK's biggest lender, Halifax, the House Price Index grew 1.7% to £222,484 month-over-month in December, surpassing the 0.3% rise forecast, up from November's upwardly revised gain of 0.6%. This was the fourth straight monthly increase and the largest gain since March 2016. Meanwhile, in the three month period ended December 2016, house prices advanced 6.5% year-over-year after climbing 6.0% in the three months to November. The house price inflation rate climbed 2.5% and 6.5% quarter-over-quarter and year-over-year in the Q4, respectively. The average house price jumped around £4,000 last month, the fastest increase since the Brexit vote.
Separately, Nationwide reported earlier that capital home prices rose at a slower pace than an average rise in the UK, for the first time in 8 years. However, house prices advanced 4.5% on annual basis, at the same rate as in 2015. Analysts suggest that the UK housing market growth is expected to slow 1-4% during 2017.
Another uneventful day
Tuesday is also quiet in terms of fundamental data releases, with only one event having some importance – the US JOLTS Job Openings, which shows the number of new jobs openings of the previous month, with the exception of the farming industry. Tomorrow, however, attention could be paid to the UK Manufacturing Production and the NIESR GDP Estimate, which are likely to drive the Pound.
GBP/USD keeps falling deeper into the pit
With newly arisen concerns about Brexit, the Pound experienced another leg down and closed trade below the immediate support level. Nevertheless, the second demand area limited the volatility and it could also be sufficient to trigger a recovery in the upcoming days. In the meantime, the Cable has some room for another decline of 50 pips, which is likely to be the case today. Technical studies, however, are unable to confirm this possibility. The immediate demand area, located around 1.21, is the only obstacle on the pair's path, preventing it from reaching the trend-line below 1.20.
Daily chart
Political factors keep weighing on the Sterling, causing it reach new lows. At this point a lot of uncertainty remains and with the only technical support being around 1.19. The fundamental data could provide a boost, but lately it keeps having weaker effects.
Hourly chart
Traders mostly bullish
Traders appear to be buying the dips, as 71% of all open positions remain long (previously 69%). At the same time, the portion of sell orders dropped lower, namely from 61 to 57%
A similar situation is observed elsewhere. For example, 66% of positions open at OANDA are currently long. This is more than the share of shorts (34%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 64% of traders being long and 36% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
By the end of the next three months traders expect the Cable to fall under the 1.24 major level, as 66% of survey participants believe so. While the current price is around 1.22, the average forecast for April 10 is 1.2266. However, the 1.20-1.22 interval is now the most popular one, having 16% of the votes, while on the second place is the 1.22-1.24 price range, with 14% of poll participants choosing it. Furthermore, the 1.14-1.16, 1.16-1.18 and 1.18-1.20 intervals were chosen by 12% of the voters each.