- The share of sell orders rose from 54 to 55%
- 57% of traders hold long positions
- The 20-day SMA and the monthly PP form resistance around 1.4430
- Support is around 1.4372, represented by the 100-day SMA
- 63% of traders reckon GBP/USD will be at 1.44 or higher in three months
- Upcoming events: UK Goods Trade Balance, FOMC Member Dudley Speech, US JOLTS Job Openings, US Wholesale Inventories
The Pound set off with rather good performance this week, having appreciated against most of other major currencies, with exception against the US Dollar and the Swiss Franc. The Sterling surged the most against the Japanese Yen, namely 0.97%, as demand for safe-haven assets was lower. The second largest rally of 0.86% was registered against the New Zealand Dollar, as the NZ Finance Minister stated that the RBNZ could tighten LVR (loan to value ratio) rules. The British currency also added 0.55% and 0.25% against the remaining commodity currencies, namely against the Aussie and the Loonie, respectively, followed by a 0.05% gain versus the Euro. Losses, however, were registered against the US Dollar (0.14%) and the Swissie (0.27%).
British house prices declined more steeply than expected in April after the introduction of a new tax on the purchase of rental properties, and the market might start to cool, mortgage lender Halifax said. Average values decreased 0.8% from March, reducing the annual increase to 7.8% from about 11%. On a less-volatile quarterly basis, prices climbed 1.5% from the previous three-month period.
Finance minister George Osborne announced in November that landlords acquiring buy-to-let properties, as well as people buying second homes, would pay a new 3% surcharge from April 1 in an attempt to support first-time buyers, who have struggled to cope with the precipitous pace of house price growth. A record 165,400 UK properties were sold in March ahead of the tax changes, which was 11% more than the previous high in January 2007, according to HM Revenue and Customs (HMRC). Last week Osborne said that house prices could take a "significant hit" if Britons vote to leave the European Union in a referendum on June 23. Halifax said the average house price in the UK was 212,321 pounds. Halifax expects house prices to continue moderating throughout the rest of this year.
UK Trade Balance and US JOLTS Job Openings
There is not a lot of fundamental data that could influence the Cable today. First of all, the Trade Balance. It is released by the National Statistics and is a balance between exports and imports of goods. A positive value shows a trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the GBP. If a steady demand in exchange for UK exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the GBP. From the US side attention should be paid to the US JOLTS Job Openings. The JOLTS Job Openings are released by the Bureau of Labor Statistics; they are a number of job openings during the reported month, excluding the farming industry. Although it is released late, it could still have an impact on the market, because job openings are a leading indicator of overall employment.
GBP/USD reluctant to drop under 1.44
The Sterling remained relatively unchanged against the US Dollar on Monday, unable to pierce the 20-day SMA resistance. However, due to a slight decline yesterday, the monthly PP was breached, which is now bolstering the 20-day SMA, creating an even stronger resistance area just above the opening price. At the same time, the 100-day SMA is the nearest support, which appears to be keeping the GBP/USD pair from sustaining sharper losses, for the moment at least. Technical studies also retain their bullish signals, but a positive development is doubtful, unless UK fundamentals surprise with stronger data today.
Daily chart
The GBP/USD pair appears to have formed a descending channel pattern on the hourly chart. With a stronger Pound the Cable could put the channel's resistance line to the test and even cause an upside breakout, unless the fundamental data turns in the Greenback's favour, causing the pair to maintain trade within the channel's borders.
Hourly chart
Bulls now in the majority
There are 57% of traders holding long positions, compared to 58% on Monday. The share of sell orders barely changed as well, having risen from 54 to 55% over the past 24 hours.
At OANDA market sentiment is in a perfect equilibrium no longer, as 52% of their open positions are long, and the remaining 48% are short. Meanwhile, the sentiment at SAXO Bank is similar to OANDA's, yet different, as 52% of their open positions are currently short.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.44 in three months
The majority of traders (63%) believe the British currency is to cost 1.44 or more dollars after a three-month period. The most popular price interval was selected by slightly more than a quarter (34%) of the voters, namely the 1.44-1.46 one, while the second most popular choice implies that the Sterling is to cost between 1.46 and 1.48 dollars in three months, chosen by 12% of the surveyed. At the same time, the mean forecast for Aug 10 is 1.4452.