- The share of sell orders edged down from 59 to 52%
- Bullish market sentiment returned to its Monday's level of 55%
- The nearest resistance is located at 1.3160
- Support is at 1.3011
- 58% of traders reckon GBP/USD will be at 1.32 or lower in three months
- Upcoming events: UK Preliminary GDP, US Durable and Core Durable Goods Orders, US Crude Oil Inventories, FOMC Statement and Federal Funds Rate
New US single-family home sales rose more than expected in June, fresh figures from the US Census Bureau showed on Tuesday. Sales of newly built homes grew 3.5% to a seasonally adjusted rate of 592,000 units during the reported month, posting the strongest reading since February 2008 and surpassing market analysts' expectations for an increase to 560,000 units. In the meantime, the previous month's sales pace was revised up to 572,000 from the originally reported 551,000 units. The housing market is being underpinned by the tightening labor market, which is starting to lift wages, as well as very low mortgage rates.
Other data released on Tuesday showed that the mood of shoppers across the United States worsened less than expected in the seventh month of the year, as the Conference Board Consumer Confidence Index dropped to 97.3 points in July, whereas economic desks predicted a steeper deceleration to 95.6 in the reported month. Meanwhile, last month's figure was revised down to 97.4 from the prior reading of 98.0 points, which was the highest since January. Furthermore, it appeared that Britain's recent decision to leave the European Union did not have any significant impact on American consumers.
FOMC Statement to have the most impact
Among important fundamental data attention should be paid to the UK Preliminary GDP figures, as GDP is the main measurement of the country's economic situation. The Preliminary GDP is the earliest and the broadest measure of economic activity in the country, thus, it is likely to have the most impact. Another event to have an impact on the Cable are the US Durable and Core Durable Goods Orders. The Durable Goods Orders measure the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments, they are sensitive to the US economic situation. The Core Durable Goods Orders, however, exclude the transport sector. However, the most impact should be from the Federal Funds Rate, but that is expected to remain unchanged, with attention turning to the tone of the FOMC statement, which is to ultimately drive the USD pairs today.
GBP/USD in limbo ahead of FOMC Minutes
For the second day in a row the GBP/USD currency pair remained almost completely flat, having edged only ten pips lower yesterday. The Cable remained in limbo mostly due to lack of market movers during the previous days, but that is about to change, as a number of fundamentals are scheduled for today. The Pound is still located below the 20-day SMA and the weekly PP resistance cluster, thus, a downside development is more probable. Technical indicators are too suggesting that the bearish outcome is more likely to occur, but the 1.31 major level remains a relatively strong support. In case of a failure to limit the losses, the next target will be the weekly S1 at 1.3011.
Daily chart
The Cable continued to consolidate between 1.31 and a.3150 on Tuesday as well, but with the set of data scheduled for today the pair is expected to reach either trend-line of the descending channel pattern. The resistance line is also reinforced by the 200-hour SMA, thus, a decline is more likely.
Hourly chart
Bulls remain in control
Bullish market sentiment returned to its Monday's level of 55%, while the share of sell orders edged down from 59 to 52%.
Compared to Monday, there are slightly more bulls at OANDA - they take up 55% of the positions open with the Canada-based broker (unchanged since yesterday). Sentiment at Saxo Bank remains somewhat neutral, as here the number of bulls exceeds the number of bears by only 2 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.32 in three months
More than half of traders (58%) believe the British currency is to cost 1.32 or less dollars after a three-month period. The most popular price intervals was selected by only 22% of the voters, namely the 1.28-1.30 one, while the second most popular choice implies that the Sterling is to cost between 1.24 and 1.26 dollars in three months, chosen by 19% of the surveyed. At the same time, the mean forecast for Oct 27 is 1.3216.