- The portion of orders to sell the Pound edged higher from 55 to 64%
- 57% of traders hold long positions today
- Main resistance is at 1.4339
- The nearest support is represented by the monthly PP and the 55-day SMA around 1.4260
- 56% of traders reckon GBP/USD will be at 1.44 or lower in three months
- Upcoming events: US Building Permits, US Housing Starts, BoE Governor Carney Speech
Due to a rebound of the European stock market, the British currency managed to outperform all other major peers on Monday. The Pound set off with rather solid gains of 0.61% against the Yen and 0.54% versus the US Dollar, while lesser rallies were registered against the remaining major currencies. The Sterling added only 0.28% against the Euro and 0.23% versus the Swiss Franc, whereas concerning the commodity currencies, the GBP surged 0.24%, 0.21% and 0.11% against the Loonie, the Aussie and the Kiwi, respectively. The rebound in oil prices was the main reason of lesser gains against commodity-based currencies.
UK house prices rose to a record in April as a strong labour market and ultra-low interest rates continue to support house price growth in Britain. Average asking prices rose 1.3% from March to 307,033 pounds, according to the Rightmove property portal. On an annual basis, prices were 7.3% higher. The data revealed that the price change in April was driven upward mainly by larger and more expensive properties, whereas the price of smaller properties purchased by first-time buyers experienced a monthly decline of 1.4%.Mortgage provider Halifax reported earlier this month reported that house prices had advanced in the three months to March, surging 10.1% above the level recorded during the same quarter last year. Prices also climbed when measured on a monthly basis, by 2.6%, recovering from a decline of 1.5% a month before, Halifax said. Despite this surge in the first quarter, Halifax said housing market activity should slow in the second half of this year.
The number of mortgage approvals growth slowed only slightly to 73,871 in February, compared with 74,085 a month before, but remained close to January's two-year peak, according to the Bank of England.
US Building Permits is the only relevant fundamental release today
Today there is an important economic data release, concerning the US economy, which is the US Building Permits. The Building Permits, released by the US Census Bureau, at the Department of Commerce, shows the number of permits for new construction projects. It implies the movement of corporate investments (US economic development). It tends to cause some volatility to the USD. Furthermore, the BoE's Governor is scheduled to speak later today. As the head of the central bank, he has most influence over the nation's currency value than anyone else. The Sterling could either strengthen or weaken, depending on his stance.
GBP/USD attempts to climb over 1.43
The Sterling surprisingly recovered on Monday, due to the European stock market rebound triggering demand for riskier assets. As a result, the Cable completely erased last week's gains, also breaking out of the falling wedge pattern earlier than anticipated. The bullish momentum is now likely to prevail, leading the exchange rate closer towards the resistance line at 1.45. The closest area to limit the gains is represented by the weekly R1 at 1.4339, but we should not rule out the possibility of the fundamentals pushing the GBP/USD pair back towards 1.42, as technical indicators retain their bearish signals in all timeframes.
Daily chart
The Pound's rebound caused the resistance line to be pierced, indicating that more bullish momentum is likely to follow. The GBP/USD currency pair can now continue climbing towards the second down-trend, unless the previous week's high of 1.4350 causes a U-turn.
Hourly chart
Sentiment remains bullish
Bulls lost some numbers, as 57% of traders hold long positions today, compared to 65% on Monday. Meanwhile, the portion of orders to sell the Pound edged higher, namely from 55 to 64%.
Concerning the sentiment of other market participants, OANDA once again has a positive outlook towards the Cable, as 57% of their open positions are long, compared to 54% on Monday. Meanwhile, the sentiment at Saxo Bank remains bearish, with 55% of all open positions now being short and the remaining 45% being long.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.44 in three months
The majority of traders (56%) believe the British currency is to cost 1.44 or less dollars after a three-month period. The two most popular price intervals were selected by 32% of the voters (equally divided), namely the 1.44-1.46 and the 1.46-1.48 one, while the second most popular choice implies that the Pound is to cost between 1.38 and 1.40 dollars in three months, chosen by 14% of the surveyed. At the same time, the mean forecast for July 19 is 1.4243.