The number of homes that went under contract inched higher in October, a sign the housing market could be plateauing in the final months of the year. The National Association of Realtors reported that its pending home sales index, which tracks contract signings for previously owned homes, edged up 0.1% from a downwardly revised September reading to a seasonally adjusted 110.0. Sales typically close within a month or two of signing. It is essential to note that while demand for housing is high, supply still continues to weaken across much of the nation and is well below 2015 levels. While homebuilders ramped up production in October, overall construction is still well below historical norms. Builders cite the high costs of land, labor and regulation as barriers to increased volume.
In addition to that data showed that US crude oil inventories fell unexpectedly last month. In a report, Energy Information Administration said that US crude oil inventories fell to a seasonally adjusted annual rate of -0.884M, from -1.255M in the preceding month.
UK and US Manufacturing PMIs are the main events
GBP/USD begins marching forward
Yesterday the British currency one again successfully outperformed the US Dollar, having received a sufficient boost from a retest of the wedge's support line. Today even if bears manage to take the upper hand, losses are unlikely to exceed 70 pips, as a drop lower would imply the breach of the two-month up-trend, which is still reinforced by the 20-day SMA, the weekly and the monthly PPs. Moreover, technical indicators are in favour of the positive outcome, and now with the 1.25 threshold broken, the Cable has the potential to climb higher. At the moment the 1.26 level is the target, while the weekly R1 and the Bollinger band circa 1.2580 form the only solid resistance on the way.
Daily chart
Hourly chart
Traders mostly bullish
Bullish market sentiment remains unchanged at 60%, while the share of sell orders added 2% points, having risen to 58%.
A similar situation is observed elsewhere. For example, 60% of positions open at OANDA are currently long. This is more than the share of shorts (40%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 59% of traders being long and 36% 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 March 01 is 1.2398. Furthermore, the 1.16-1.18 interval is now the most popular ones, having 13% of the votes. On the second place in terms of the votes are the 1.18-1.20 (11%), 1.20-1.22 (11%) and the 1.26-1.28 (11%) intervals, followed also by the 1.26-1.28 and 1.30-1.32 intervals, both with only 10% of the votes. Moreover, 51% all survey participants believe the Cable is to fall below 1.24.