The Sterling ended the week with poor performance, having sustained rather serious losses against all other major currencies. The British currency declined the most against the New Zealand currency, namely 1.05%, followed by another sharp loss of 0.93% against the European single currency on Friday and over the weekend. Further losses of 0.75% and 0.71% were registered against the US Dollar and the Swiss Franc, respectively, whereas the Pound also edged lower 0.63% against the other commodity currency, the Loonie, and 0.60% against the Aussie. The GBP/JPY was the best performer among majors, even though the pair slumped 0.53%.
US home resales continued to rise, increasing more than expected in April, as housing demand strengthens alongside gradual job growth and ultra-low interest rates. Sales surged 1.7% in April from the previous month to a seasonally adjusted annual rate of 5.45 million, the National Association of Realtors reported. Economists had predicted sales would climb 1.3% to a rate of 5.40 million in April. Sales soared 6.0% from a year ago. Nevertheless, there were regional variations. While sales of existing homes surged in the Midwest by 12.1% last month and also increased in the Northeast, the South and West declined. Thus, affordability remains a key issue. The national median sale price for a previously owned home last month stood at $232,500, up 6.3% from a year earlier, marking the 50th consecutive month of year-over-year gains. Prices are rising at a far faster rate than most workers' wages, average weekly earnings adjusted for inflation climbed just 1.3% in April from April last year.
Also, the NAR said there were 2.14 million existing homes available for sale at the end of April, up 9.2% from March as sellers put their homes on the market for the spring selling season. However, compared with April a year ago, inventory declined 3.6%. That is a 4.7-month supply at the current sales pace.
US Markit Manufacturing PMI is the only relevant event today
GBP/USD to undergo a correction
Although the Sterling was outperforming the US Dollar through most of the previous week, on Friday approximately a half of intraweek gains were erased, with the pair falling more than 100 pips and stabilising in front of the 1.45 mark. The Cable remains supported by the 20-day SMA, which is now also bolstered by the weekly PP right on top of the 1.45 major level. Even though a drop below this area is unlikely, a possibility still exists, as technical indicators are giving mixed signals. Meanwhile, the closest resistance area is located only around 1.4690, but there is no impetus present for a rally that high.
Daily chart
Hourly chart
Bears now in the majority
There are now 54% of traders being short the Pound, compared to 59% last Friday. At the same time, the portion of buy orders dropped significantly lower, namely from 61 to 49%.
At OANDA market sentiment worsened over the day, as 53% of their open positions are now short, compared to 52% last Friday. Meanwhile, the sentiment at SAXO Bank slightly improved, as bears now take up 53% of the market, compared to 55% on Friday.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.46 in three months