- The share of sell orders increased from 43 to 56%
- 55% of traders hold long positions
- The nearest resistance is located at 1.4288
- The weekly R1 and the monthly PP form resistance circa 1.4515
- 50% of traders reckon GBP/USD will be at 1.46 or higher in three months
- Upcoming events: UK Public Sector Net Borrowing, Markit Services PMI, Fed Chair Yellen Testimony, FOMC Member Powell Speech
With the ‘Bremain' polls taking the lead, the British Pound managed to outperform all other major currencies on Friday and over the weekend. The Sterling gained the most against the weaker Buck, adding 1.09%, also edging significantly higher against the Yen (1.01%) and the New Zealand Dollar (0.94%). Concerning the remaining major peers, the GBP/AUD surged 0.68%, followed by a 0.63% rally versus the Swiss Franc, 0.61% against the Euro and 0.57% versus the Canadian Dollar.
As reported by the US Census Bureau, there were 1.164 million constructions of residential buildings started in the US in May. The data beat expectations of 1.15 million, while still being below the April's reading of 1.172 million. During the previous month there was a sharp increase in the construction, but a lot of homes on the market became less affordable, amid a rather sharp increase in prices for those homes. Mortgage rates, however, are at low levels, somewhat boosting demand for apartment and house acquisitions, but, nonetheless, for some prices remain too high. Single-family houses have a higher impact than apartments, as they provide a larger economic boost and they rose 0.3% up to 764,000, while apartments showed only 396,000 residences, thus, barely changed compared to the previous month's data.
Furthermore, only 1.138 million building permits for construction were issued in the US last month, with the data slightly failing to meet expectations of 1.15 million. Among permits the single-family ones provided concerns, as they showed the largest monthly slowdown during the past 15 months. The permits for houses dropped 2% down to 726,000 units, while the apartment permits were at 381,000 units. This weaker data is unlikely to have a serious effect on the GDP second estimate, as it is forecasted to show signs of improvement, being driven by higher demand in household.
Uneventful Monday
There are no important economic data releases scheduled for Monday, but on Tuesday traders should pay attention to the UK Public Sector Net Borrowing. Released by the Office for National Statistics, the Public Sector Net Borrowing is the difference in value between spending and income for public corporations, central and local governments during the preceding month. From the US side, the Markit Services PMI is due. The Services PMI is released by the Markit Economics, captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in the US. Another even is Fed Yellen's Testimony. As head of the central bank, which controls short-term interest rates, she has more influence over the nation's currency value than any other person. More insight concerning future interest rate hikes and the overall economic condition in the US is expected.
GBP/USD continues to edge higher
The Sterling regained the bullish momentum on Friday, as ‘Bremain' vote took the lead. The Cable not only climber over the 100-day SMA that day, but even opened with a rather serious bullish gap today. The British currency retained most of its strength due to the positive EU referendum polls, which could help the exchange rate stabilise above the 1.46 major level. In this case the pair will erase losses for the past two weeks. The weekly R2 is the level to limit the gains, while the upper border is located around 1.4692, represented by the 200-day SMA. Nevertheless, the Pound remains unstable ahead of the EU referendum, thus, the possibility of the downside development exists.
Daily chart
Ever since the pair touched the April low and bounced back from the support line last Thursday, the Sterling kept appreciating against the US Dollar. Right now the Cable faces the resistance trend-line around 1.4750, where a rebound is expected.
Hourly chart
Bulls and bears remain in balance
There are 55% of traders holding long positions (previously 62%). At the same time, the share of sell orders increased from 43 to 56%.
Compared to Tuesday, there are also slightly more bulls at OANDA - they take up 56% of the positions open with the Canada-based broker. Sentiment at Saxo Bank is now bearish, as here the number of bears exceeds the number of bulls by eight percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.46 in three months
Exactly half of traders (50%) believe the British currency is to cost 1.46 or more dollars after a three-month period. The most popular price interval was selected by slightly less than a fifth (16%) of the voters, namely the 1.46-1.48 one, while the second most popular choice implies that the Sterling is to cost either between 1.44 and 1.46 dollars or between 1.52 and 1.54 dollars in three months, both chosen by 11% of the surveyed. At the same time, the mean forecast for Sep 20 is 1.4522.