US pending home sales dropped unexpectedly last month to the lowest level since January 2016, official figures revealed on Wednesday. The National Association of Realtors reported its Pending Home Sales Index fell a seasonally adjusted 2.5% to 107.3 in November, following the preceding month's rise of 0.1% to 110.0 points, while market analysts anticipated a slight acceleration of 0.5% during the reported period. On an annual basis, the Index declined at an annualized pace of 0.4%. In regional terms, sales jumped 0.6% in the Northeast, but dropped 2.5% in the Midwest, 6.7% in the West and 1.2% in the South during November. According to NAR Chief Economist Larry Yun, the sharp rise in mortgages rates and shortages on the housing market were the main driver of the decline last month.
As a result, the EUR/USD pair fell to 1.0394 from 1.0398 ahead of the release, while the GBP/USD declined to 1.2210 from 1.2217. Meanwhile, the US Dollar Index, which tracks the Greenback's performance against a group of six other currencies, remained unchanged at 103.67.
Relatively quiet end of the year
GBP/USD in tight range between 1.22 and 1.23
Wednesday ended with the British Pound weakening against the US Dollar again, this time piercing the monthly S1. However, the second target remained untouched, as volatility was limited by the 1.22 and the 1.23 major levels. Even though technical indicators keep giving bearish signals today, the 1.22 mark could still hold and prevent the Cable from falling deeper down, also being reinforced by the monthly S1. The monthly S1 is now unlikely to be reliable, thus, the Sterling has the potential to negate yesterday's losses and edge closer to the 1.23 mark once more.
Daily chart
Hourly chart
Traders mostly bullish
Market sentiment remains bullish, with 66% of all open positions being long today (previously 65%). Meanwhile, the share of sell orders inched down, namely from 59 to 56%.
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 64% of traders being long and 46% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
By the end of the next three months traders expect the Cable to fall under the 1.26 major level, as 58% of survey participants believe so. While the current price is around 1.23, the average forecast for March 29 is around 1.25. However, the 1.16-1.18 interval is now the most popular one, having 16% of the votes, while on the second place are the 1.18-1.20, the 1.22-1.24 and the 1.28-1.30 price ranges, with 12% of poll participants choosing each of them.