- The share of sell orders declined from 61 to 56%
- 56% of all open positions are short
- The nearest support is at 1.3222
- Immediate resistance is around 1.3350
- 52% of traders reckon GBP/USD will be at 1.30 or lower in three months
- Upcoming events: US Durable and Core Durable Goods Orders, US Jobless Claims, US Markit Services PMI
Existing home sales in the United States dropped more than expected last month after rising for four consecutive months, official figures revealed on Wednesday. According to the National Association of Realtors, sales fell 3.2% to a seasonally adjusted annual rate of 5.39 million units in July, compared to the preceding month's reading of 5.57 million, whereas market analysts anticipated a 0.3% decline to 5.52 million in the reported month. US home resales were 1.6% lower than a year earlier. Nevertheless, analysts view the drop in existing home sales as temporary and expect these sales to pick up soon. Home resales declined in the Northeast, the South and the Midwest; however, jumped 2.5% in the West.
Meanwhile, the number of unsold homes on the market increased 0.9% in the seventh month of the year, whereas supply fell 5.8% and the median house price advanced 5.3% year-over-year to $244,100. Other data released by the Energy Information Administration on Wednesday showed a surprise increase in US crude oil inventories. According to the report, US crude stockpiles added 2.5 million barrels in the week ended August 19, following the 2.5% drop seen in the previous seven weeks and surpassing the 0.5 million-barrel fall forecast. After the release, Brent oil declined 1.5% and WTI dropped 1.8%, both trading below the $50 level.
US Durable & Core Durable Goods Orders are the main drivers today
Once again all focus is on the US fundamentals, namely the Durable and Core Durable Goods Orders, the Jobless Claims and the Markit Services PMI. Durable Goods Orders measure the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. Core Durable Goods Orders, however, exclude the transport sector. As those durable products often involve large investments, they are sensitive to the US economic situation. The final figure shows the state of US production activity. The Initial Jobless Claims are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Finally, the Markit Services PMI, which 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.
GBP/USD in limbo ahead of US data
The Sterling appreciated against the US Dollar for the third consecutive day yesterday, but with each rally being smaller than the preceding one, suggesting that a reversal is due. Stronger US fundamentals could trigger a Cable sell-off today, with the exchange rate returning under the 1.32 major level. However, technical studies are unable to confirm this outlook, as they retain mixed signals, but a possibility certainly exists. In case of a bearish development, the nearest significant support will be the monthly PP at 1.3170. Contrariwise, disappointing US data might only further strengthen the given pair, providing an opportunity to reclaim the 1.33 mark.
Daily chart
The GBP/USD currency pair continued to advance on Wednesday, reaching a fresh three-week high. The nearly two-week up-trend still requires an extra confirmation, but, as was mentioned in the daily outlook, risks are skewed to the downside. However, a drop below the 1.31 mark is unlikely to occur, as the 200-hour SMA is bolstering that area.
Hourly chart
Still no consensus
Today 56% of all open positions are short (previously 53%). Meanwhile, the share of sell orders declined from 61 to 56%.
Indecision appears to be widespread, as the same neutral sentiment is observed among the traders of other brokers. At OANDA, 50% of positions are long and 50% are short. The sentiment at Saxo Bank is now bearish, as the numbers of longs and shorts each take up 43% and 57% of the market, respectively.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees the GBP/USD below 1.30 in three months
Slightly more than half of traders (52%) believe the British currency is to cost 1.30 or less dollars after a three-month period. The most popular price interval, however, was selected by 14% of the voters, namely the 1.26-1.28, while the second most popular choices imply that the Sterling is to cost either between 1.24 and 1.26 dollars or between 1.34 and 1.36 dollars in three months, chosen by 12% of the surveyed. At the same time, the mean forecast for Nov 25 is 1.3058.