US housing starts dropped unexpectedly last month, whereas building permits rose more than expected, official figures revealed on Wednesday. According to the US Department of Commerce, the total number of housing starts issued fell 9.0% to a seasonally adjusted annual pace of 1.05 million in September, hitting the lowest level since March 2015, while market analysts anticipated a slight increase to 1.18 million units during the reported period. August's housing starts were revised up to a 1.15 million rate from the originally reported pace of 1.14 million starts. US single-family starts, which account for the largest segment of the market, climbed 8.1% to a 783,000 unit pace last month, the highest reading since February. The drop was mainly driven by the volatile multi-family segment, which posted a 38.0% decline to 264,000 unit pace in September.
In the meantime, building permits advanced 6.3% to a seasonally adjusted annual pace of 1.23 million in the same month, following August's upwardly revised reading of 1.15 million permits and surpassing the 1.17 million unit pace market forecast. Building activity is set to rebound in the coming months as building permit values remained strong, with single-family and multi-family permits rising 0.4% and 16.8% in September.
Another set of fundamental data is due
GBP/USD in limbo around 1.23
The Cable remained relatively unchanged on Wednesday, unable to make its way above the 1.23 level, but with the immediate support cluster also limiting the losses. Technical studies retain mixed signals today, suggesting that the GBP/USD pair is in for another day of flat trade. However, a lot more volatility is expected today, compared to what was seen on Wednesday. Consequently, downside risks are higher, as the monthly S3 failed to keep the Sterling elevated slightly more than a week ago. The 1.22 level is seen to be the bottom floor in case of another leg down.
Daily chart
Hourly chart
Traders mostly bullish
Bullish traders' sentiment returned to its Monday's level of 64% (up from 63% yesterday). The majority of all pending orders are still to sell the Pound, namely 57% of them
A similar situation is observed elsewhere. For example, 61% of positions open at OANDA are currently long. This is more than the share of shorts (39%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 68% of traders being long and 32% 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 1.23, the average forecast for January 20 is 1.2685. Furthermore, the 1.28-1.30 interval is now the most popular one, having 12% of the votes. On the second place in terms of the votes is the 1.32-1.34 (11%) interval, followed by the 1.16-1.18 price range with 10% of the votes. Moreover, 65% all survey participants believe the Cable is to fall under 1.30.