Optimism in UK's citizens voting for the Kingdom to remain in the EU caused the British currency to strengthen against all other major currencies for another day. The largest gains of 2.53% and 2.37% were registered against the Swissie and the US Dollar, respectively, followed by two more decent rallies of 2.13% versus the Japanese Yen and 2.01% against the Euro. The smallest gains, however, were seen against the commodity currencies, due to a jump in oil prices. The GBP/CAD edged up only 1.61%, GBP/AUD up 1.47% and the GBP/NZD pair surged 1.43% on Monday.
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.
UK Public Sector Net Borrowing, US Services PMI and Yellen's Testimony
GBP/USD enjoys 1.47 area
The British currency overperformed on Monday, having edged more than 200 pips higher against the US Dollar. Moreover, the Cable reconquered the 1.47 major level yesterday, but still remains in an overall bearish trend until the resistance line is overcome. Technically, the Pound should undergo a correction today, with investors taking advantage of the previous sharp rally. Aggregate technical indicators are bolstering this possibility, but ahead of the EU referendum the Sterling's behaviour became more and more unpredictable, thus, the down-trend at 1.4760 could be put to the test today.
Daily chart
Hourly chart
Bears are now outnumbering the bulls
Traders turned bearish on the Pound, being that 54% of all open positions are short (previously 45%). At the same time, the portion of sell orders increased from 56 to 62%.
Compared to Monday, there are also slightly more bears at OANDA - they take up 52% of the positions open with the Canada-based broker. Sentiment at Saxo Bank is still bearish, as here the number of bears exceeds the number of bulls by 16 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 between 1.44 and 1.46 dollars in three months, chosen by 13% of the surveyed. At the same time, the mean forecast for Sep 21 is 1.4531.