- Buy orders take up 47% of the market
- 57% of all traders hold long positions today
- Immediate resistance is represented by the weekly PP at 1.5084
- The weekly S1 and the Bollinger around 1.4970 are the nearest support
- 70% of traders reckon GBP/USD will be at 1.54 or lower in three months
- Upcoming events today: UK Net Lending to Individuals, UK Mortgage Approvals, Chicago PMI, US Pending Home Sales
The Sterling experienced mixed performance on Friday and over the weekend, mostly appreciating against commodity currencies. Gains were registered against the Swissie (0.16%), the Loonie (0.14%) and the Kiwi (0.11%), while the Sterling also remained relatively unchanged versus the Aussie, adding only 0.01%. Losses, however, were detected against the US Dollar (0.44%), the Euro (0.28%) and the Yen (0.26%).
British consumer confidence declined to its lowest level in the last six months in November, a survey conducted by GfK on behalf of the EU revealed. The consumer sentiment indicator fell to +1 in November from +2 in the preceding month, while analysts had expected it to remain unchanged in November. The last time the figure reached such a low level was in May. With regards to Britain's economic growth, it demonstrated weak numbers in the third quarter. The second revision to the UK GDP stayed steady at 0.5%, matching market expectations, the Office for National Statistics reported. In the second quarter, the economy grew by 0.7%. Measured in yearly terms, the GDP climbed up by 2.3%. The government's spending accounted for 1.3% quarter-on-quarter, capital expenditure rose by 1.3% on quarter and the total business investments stepped up by 2.2%, beating economists' projections of 1.5%.
As to the house price growth in the UK, it slowed somewhat in November, according to data collected by Nationwide. More precisely, house prices moved up 3.7% from a year ago down from October's 3.9%. It was the weakest growth since August, when prices increased by 3.2%. On a monthly basis, house prices climbed 0.1% in November compared with a rise of 0.5% in October.
UK and US data expected mixed, Cable's fate uncertain
From the UK the most important events are the Net Lending to Individuals and the Mortgage approvals. The Net Lending to Individuals are expected to decline slightly, compared to the preceding release, while the Mortgage Approvals to increase, thus, providing mixed data for the Sterling. Later today the US is to release the Pending Home Sales data, which shows the number of homes under contract to be sold, with transactions awaiting to be closed. These Home Sales along with the Chicago PMI are likely to be the main events to influence the Cable in the second half of the day and are also expected to provide mixed figures. As a result, the GBP/USD's exchange rate might remain relatively flat today.
Ross Walker, economist at Royal Bank of Scotland Group, suspects that GBP/USD may descend to 1.50 by around the middle of 2015, or even down to 1.40 by the end of the year. Ross mentioned that "the main driver in many ways, as well as the main support in recent times, have been the expectations that the Bank of England will raise interest rates at some point next year, probably at the beginning 2016."
GBP/USD hovers over November low
In spite of all positive signs, the Sterling suffered a rather heavy loss against the US Dollar on Friday, amid rising conviction of the Fed hiking in December. The Nov low at 1.5026 was able to limit the losses and should cause the Cable to undergo a correction and rebound today. The immediate resistance to prevent any substantial gains is located only at 1.5084, but is unlikely to be reached. At the same time, risks of the GBP/USD edging even lower persist, with the weekly S1 and the Bollinger band providing support around 1.4970.
Daily chart
The possible new up-trend was breached last Friday, causing the Cable to drop all the way down to the November low of 1.5026. Although the GBP/USD is now attempting to rebound from this low and regain the bullish momentum, the pair might still encounter resistance around 1.5050, namely a new arising down-trend. Failure to appreciate beyond this mark would confirm the down-trend.
Hourly chart
Bulls now outnumbering the bears
Market sentiment keeps improving, with 57% of all traders holding long positions today. The gap between the buy and the sell orders narrowed. Orders take up 47% and 53% of the market, respectively.
OANDA and SAXO Group are different in their outlookts towards the GBP/USD. At OANDA, 57% of traders are holding long positions and the remaining 43% - short. Meanwhile, the share of bears at SAXO Group is taking up 53% of the market, down from 59% on Friday.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.54 in three months
The majority of votes shifted to the bearish, as most of the survey participants (70%) believe the GBP/USD is going to cost 1.54 or less US dollars in three months. The most popular price interval is the 1.48-1.50, chosen by almost a quarter (24%) of the voters, while the second choice in popularity was the 1.46-1.48 price range, selected by only 15% of participants. Meanwhile, the mean forecast for Mar 01 is 1.5188.