- The portion of orders to sell the Pound inched down from 60 to 59%
- Market sentiment remains bullish at 62%
- Immediate resistance is at 1.2450
- The closest support is at 1.2380
- Upcoming events: UK Manufacturing and Industrial Productions, UK NIESR GDP Estimate, US JOLTS Job Openings, US Presidential Election
UK house prices jumped unexpectedly on a monthly basis in October, despite signs of a slowdown seen in the previous six months. According to the UK's biggest lender, Halifax, the House Price Index advanced 1.4% in October, surpassing the 0.3% rise forecast. However, the October surprise growth could be a correction following September's modest rise of 0.3% and declined of 0.3% and 1.1% registered in August and July, respectively. Meanwhile, the preceding month's gain was revised up to 0.3% from the originally reported increase of 0.1%. The average price of a house in Britain climbed 1.4% to 217,411 pound last month, the biggest increase since March. Nevertheless, Halifax said that the annual house price inflation rose just 5.2% last month, the lowest level in more than three years, down from September's gain of 5.8% and a record high a 2016 record high of 10% seen in March.
Separately, Nationwide reported last week that house price growth stalled in October for the first time in 16 months. However, according to Nationwide, property prices grew 4.6% on an annual basis in the same month. Analysts suggest that the UK housing market still remained under pressure from June's vote to leave the European Union last month.
US Elections to have the most impact
Today among important data from the UK are the UK Manufacturing and Industrial Production. The Manufacturing Production measures the manufacturing output. It is significant as a short-term indicator of the strength of UK manufacturing activity that dominates a large part of total GDP. The Industrial Production measures outputs of the UK factories and mines. Changes in industrial production are widely followed as a major indicator of strength in the manufacturing sector. Another event will be the UK NIESR GDP Estimate. It is an estimate of growth over the last 3 months up to the report which comes out a month before the official announcement. The report is highly reliable and would influence the UK monetary policy. Meanwhile, from the US side the most impact will be from the US elections.
GBP/USD attempts to remain above 1.24
On Monday the British currency weakened against the US Dollar, finding support at the 1.24 major level. Consequently, the Cable is now expected to rebound and make its way towards the 1.25 psychological level, ignoring the immediate supply area. However, uncertainty remains, as technical indicators retain mixed signals in the daily timeframe, whereas US election results could have an unpredictable impact on the pair. Furthermore, last week's breach of the post-Brexit down-trend also suggests that the Sterling is to keep edging higher. The worst case scenario, however, is a slump towards 1.2150 if the Greenback receives a substantial boost from the election results.
Daily chart
The outlook on the hourly chart remains unchanged, also unable to show any clear signs of direction. The 200-hour SMA remains the nearest support, which somewhat suggests the GBP/USD pair is to edge higher. However, there is some psychological resistance at 1.2560, which can prevent the Cable from posting significant gains.
Hourly chart
Traders mostly bullish
Market sentiment remains bullish at 62% (previously 63%), while the portion of orders to sell the Pound inched down from 60 to 59%.
A similar situation is observed elsewhere. For example, 62% of positions open at OANDA are currently long. This is more than the share of shorts (38%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 61% of traders being long and 39% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect no major changes
By the end of the next three months traders expect the Cable to be higher than the level where it is now. While the current price is around 1.24, the average forecast for November 08 is 1.2113. Furthermore, the 1.18-1.20 interval is now the most popular one, having 21% of the votes. On the second place in terms of the votes is the 1.16-1.18 (17%) interval, followed also by the 1.20-1.22 with only 13% of the votes. Moreover, 78% all survey participants believe the Cable is to fall under 1.26.