- 48% of pending orders are set to buy and 52% are to sell
- Amounts of long (52%) and short (48%) positions are nearly equal
- 17% of traders still see the pair between 1.48 and 1.50 in three months
- Upcoming events: BoE Inflation Report, US Retail Sales, Unemployment Claims, Business Inventories
Despite a lack of fundamental events the Sterling was among the top three performing currencies yesterday, appreciating 0.75 and 0.56% against the Yen and the Aussie, respectively.
The UK house prices climbed at their slowest annual pace since March 2013 and declined for a fifth month in a row in London, adding to signs that the looming general election in May is undermining demand. According to the Royal Institution of Chartered Surveyors, monthly house balance dropped to +7 in January, compared with +12 in the preceding month. The index reflects the assessment of surveyors of whether house prices have increased or declined on an annual basis over the previous three months. Prices in London's capital region fell for a fifth straight month, dropping to the lowest level in six years. The latest report showed 49% of respondents reported prices in the capital falling and many remained downbeat about the prospects for the rest of the year.
Britain's housing market has been cooling since mid-2014, when regulators required banks to make more thorough checks on whether borrowers would still be able to afford mortgage repayments should interest rates go up sharply.
BoE Inflation Report
The Bank of England is predicted to revise its outlook for consumer prices to near zero when the Governor Mark Carney presents the Inflation Report later today. Carney has previously said that inflation could turn negative this year amid plunging oil prices, and some experts expect that he may present the BoE's first ever deflation report.
Stephen Pope, managing director at Spotlight Ideas, in an interview to Dukascopy TV spoke about Carney lowering the target inflation. He also sees "the idea of rate increases from the BoE is being kicked right toward the end of 2015", as "the economic numbers of late have been slipping, and that is not helpful to the current coalition government".
GBP/USD stays between 1.52 and 1.53
Simon Smith, Chief Economist at FXPro, advises not overestimate bullish potential of the US Dollar in 2015. According to him, "we will see Dollar strength through the year, but it's going to be a very difficult year in terms of trends".
As for the Sterling itself, Charles Purdy, CEO of Smart Currency Exchange, sees weakness in the nearest future, arguing that "the UK election will count against Sterling" in terms of "higher levels of uncertainty". According to the analyst, GBP/USD is likely to fall to 1.46 by the end of March. However, in a year he expects the exchange rate to recover to 1.48, after the BoE hikes the interest rates in the second half of 2015.
Daily chart
GBP/USD confirmed resistance at 1.53 yesterday, implying the pair is likely to dive under support at 1.52 (weekly and monthly PP) in the coming days. If this is the case, the Sterling will be expected to keep falling until the currency reaches the recent lows of 1.50. The next stop in the bearish scenario will be the 2013 minimum at 1.48, which is reinforced by the monthly S1, followed by the monthly S2 at 1.4560.
Hourly chart
Equal amounts of bulls and bears
The SWFX market does not exhibit preference neither to the Pound nor to the Greenback, as the amounts of long (52%) and short (48%) positions are nearly equal. A similar situation is observed with the pending orders, 48% are set to buy and 52% are to sell.
At the same time, the sentiment among the OANDA and SAXO Bank traders remains moderately bullish with respect to the Cable. The shares of long positions are 56 and 57% at OANDA and SAXO Bank, respectively.
Spreads (avg, pip) / Trading volume / Volatility
17% of traders still see 1.50/1.48 in three months
This week traders' expectations changed insignificantly, with 53% of Dukascopy Community members predicting the pair to advance. Nonetheless, the consensus estimate is beneath last week's close, as bearish forecasts were more extreme than the bullish ones. On average the FX Community traders see GBP/USD finishing this week slightly below 1.52.
A proponent of a bullish scenario, geula4x, reckons that "GBP/USD looks slightly bullish on the daily chart", adding that "Resistance lies around 1.5340, the recent high at February 5 and 6". Meanwhile, aslamhammad holds a bearish view on the pair, expecting the Dollar to outperform the Pound because of improving labour market conditions in the United States.