- 68% of all pending orders are to acquire the Pound
- 54% of all open positions are long
- The nearest resistance is located at 1.3851
- Support is around 1.3220
- 56% of traders reckon GBP/USD will be at 1.44 or lower in three months
- Upcoming events: UK Current Account, UK Final GDP, US Jobless Claims, Chicago PMI, BoE Governor Carney Speech, FOMC Member Bullard Speech
U.K. mortgage approvals rose and house prices continued their steady advance in the weeks before the country's vote on its European Union membership. UK mortgage approvals for house purchases increased to 67,042 for May from 66,205 for April and were also higher than expected figure of around 65,000 for the month. Although the total was still below the six-month average of just over 70,500, the data will boost near-term confidence in the housing sector. Trends in approvals will now be watched very closely to assess the referendum economic impact.
The outlook for the housing market has altered in the past week after the U.K. voted to leave the EU. With uncertainty about the economy on the rise and the country possibly heading for a recession that could undermine property demand and halt price gains. Interest rates remain at very low levels with the effective rate on new mortgages at 2.41% for May, which was the lowest rate since the series started in 2004, and certainly those lowest rates for over 40 years. Thus, changes in the housing sector will have an important overall impact on the economic outlook and will be monitored closely over the next few months.
US data due, but Carney's speech to have more impact
With the UK GDP already released, focus shifts to the upcoming US data today, such as the US Jobless Claims. The Initial Jobless Claims are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market which influences the strength and direction of the US economy. Second, the Chicago PMI, which captures business conditions across Illinois, Indiana and Michigan. This Index is an indicator of business trends and it is interrelated with the ISM Manufacturing Index. It is widely used to indicate the overall economic condition in US. Furthermore, the BoE's Governor is scheduled to speak today. His speech could have a significant impact on the Sterling's performance today.
GBP/USD to continue climbing higher
The British currency keeps recovering after Brexit's plunge last week, with the Cable posting more gains on Wednesday. Not much has changed over the day, as technical indicators retaining mixed signals and no significant level support or resistance getting pierced. The June 24 low is now even more reinforced by the Bollinger band, suggesting that the exchange rate is unlikely to drop below the 1.32 major level even if bears take over the market. From above the nearest levels to limit the gains are located out of reach, with the closest one being the monthly S3 at 1.3851.
Daily chart
The GBP/USD currency pair keeps consolidating between the 1.31 and 1.36 levels, as there are no events to trigger sharper movements. Right now the pair is edging closer to the 1.36 mark, where supply could cause another sell-off back towards 1.32.
Hourly chart
Bulls remain in control
Bullish sentiment keeps weakening, as 54% of all open positions are long (previously 57%). Meanwhile, there are significantly more orders to acquire the Pound today, namely 68% (previously 57%).
Compared to Monday, there are also slightly more bears at OANDA - they take up 59% 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 14 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.44 in three months
More than half of traders (56%) believe the British currency is to cost 1.44 or less dollars after a three-month period. The most popular price intervals was selected by slightly less than a fifth (14%) of the voters, namely the 1.36-1.38 one, while the second most popular choice implies that the Sterling is to cost either between 1.44 and 1.46 or between 1.46-1.48 dollars in three months, both chosen by 10% of the surveyed. At the same time, the mean forecast for Sep 30 is 1.4287.