- 56% of all orders are to buy the Pound
- 52% of all open positions are short
- Immediate resistance is around 1.30
- The closest support rests circa 1.2930
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Upcoming Events: US Existing Home Sales and FOMC Meeting Minutes
New home sales in the United States dropped more than expected last month, probably amid weaker demand. The Department of Commerce reported on Tuesday that sales of new houses dropped 11.4% to a seasonally adjusted annualised pace of 569K units in April, following the prior month's upwardly revised pace of 642K units, the highest since October 2007, and falling behind expectations for a decrease to a 611K-unit pace. On an annual basis, new home sales were up 0.5% in April. The average selling price dropped to $309.2K in April from $318.7K seen in the preceding month. Despite April's unexpected drop, analysts suggested that the housing market maintained its momentum and would continue growing in the upcoming months, supported by low mortgage rates.
New home sales plunged in all four regions; however, the largest drop of 26.3% was registered in the West. The inventory level rose 1.5% to 268K units last month, the highest since July 2009. AT the past month's sales pace it would likely take 5.7 months to sell all houses available on the market.
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Upcoming events: US Existing Home Sales and FOMC Meeting Minutes
Wednesday is not rich with fundamental data releases, as only the US Existing Home Sales are due. They provide an estimated value of housing market conditions. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD. However, most focus will be on the FOMC Meeting Minutes report. FOMC stands for the Federal Open Market Committee, which organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
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GBP/USD: another drop expected
The GBP/USD currency pair weakened on Tuesday, resulting in the consolidation trend's preservation. Consequently, the British Pound should edge lower for another day, with the 1.29 major level likely to be the bottom, despite the 20-day SMA and the weekly S1 forming support around 1.2930. On a slightly larger scale the given pair should be unable to drop under 1.2830, where the consolidation trend's lower border, the lower Bollinger band, the weekly S2 and the wedge's support line all form a strong demand cluster. This point is also likely to be able to shift polarity and spark sufficient GBP-buying for a solid surge above 1.30, eventually.
Daily chart
As was anticipated, the 200-hour SMA somewhat kept the bearish momentum away from the Cable, which was acquired on Friday, when the ascending channel's resistance line was reached. As a result, the GBP/USD pair can now receive the sufficient impetus for another surge beyond 1.30, but the 1.31 mark is likely to remain intact, as the 200-hour SMA is not enough to provide the required boost for the 1.31 handle to be overcome.Hourly chart
Read More: Technical Analysis
Bearish sentiment still prevails
Traders retain a neutral outlook towards the Sterling, with 52% of all open positions being short. Still 56% of all orders are to buy the Pound.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 60% of all open positions are short and the remaining 40% are long. Meanwhile, sentiment at Saxo Bank is also bearish, with 61% of traders now being short and the other 39% - long on the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound recovering
© Dukascopy Bank SABy the end of the next three months traders believe the Cable is to rise above the 1.30 major level, as 62% of survey participants share this belief. While the current price is around 1.30, the average forecast for August 24 is 1.3056. The 1.34-1.36 range is now the most popular price interval, having 20% of the votes, while on the second place are the 1.20-1.22 and the 1.32-1.34 intervals, both with 15% of the voters choosing them.