- The share of sell orders remained unchanged at 55%
- 63% of traders have a positive outlook towards the British currency
- Immediate resistance is around 1.2414
- The closest support is at 1.2335
- Upcoming Events: US Core Durable Goods Orders; US Final GDP; US Unemployment Claims; US Durable Goods Orders; US HPI; US Personal Spending; US Personal Income; US CB Leading Index;
Both building permits and housing starts dropped more than expected last month, suggesting that the Q4 growth rate could be possibly revised downwards. According to the US Department of Commerce, new-home construction fell 18.7%, the biggest decrease in almost two years, to a seasonally adjusted annual rate of 1.09 million units in November, while market analysts anticipated a slight deceleration to 1.23 million during the reported period. Housing starts tend to be volatile on a monthly basis. Meanwhile, the October figure was revised up to a 1.34 million-unit pace, the highest level since July 2007, from the originally reported 1.32 million. The Commerce Department also reported that building permits declined 4.7% to an annualized rate of 1.20 million units, following October's upwardly revised reading of 1.26 million, whereas economists expected them to decrease to a 1.24 million-unit pace.
Existing home sales in the United States rose for the third consecutive month in November, surprising markets and hitting their highest level for almost a decade. According to the National Association of Realtors, home resales advanced 0.7% to an annualized rate of 5.61 million units in the reported period, following October's downwardly revised rate of 5.57 million, surpassing analysts' expectations for a slight decline of 1.0% to a 5.52 million-unit pace and reaching the highest since February 2007. On an annual basis, sales increased 15.4% in November. According to the latest data published by Freddie Mac, the fixed 30- year mortgage rate has climbed around 60% to an average rate of 4.16% since Donald Trump's victory in the US presidential election. Moreover, mortgage rates are likely to go even higher after the Fed rose its key interest rate to 0.75% from 0.50% last week as well projected three more hikes in 2017. Separately, the Energy Information Administration announced on Wednesday a 2.3 million barrel increase in US crude oil inventories during the week ending December 16, while market analysts anticipated a decline of 2.4 million barrels, following the preceding week's 2.6 million barrel slip.
Loads of US data after a quiet week
It seems that instead of consistently providing the markets with data US statisticians have decided to release everything today and take a day off on Friday before Christmas. The data will begin incoming at 13:30 GMT, when the US Durable Goods Orders and US Core Durable Goods Orders will be out. In addition, the Final GDP will be published. Moreover, the US Unemployment Claims will be released at the same time. That is not all for that time, as the US Final GDP Price Index also will be released at 13:30 GMT. If that will not be enough to establish an understanding of the future movements of the US Dollar and the markets, there will be an additional data release at 15:00 GMT. At that time the US Core PCE Price Index, US CB Leading Index, Personal Spending and Personal Income will be released in the common pool of information.
GBP/USD continues to rebound
The Sterling had slightly appreciated on Thursday morning against the Greenback, as the currency exchange rate traded above the 1.2350 mark. However, the pair had experienced more volatility to the upside until 7:00 GMT. Previously, during the first half of the week the currency rate fell from 1.2489 on Monday to 1.2314 during Tuesday's trading session, where it found support and rebounded. The rebound has been slowly continuing since then. Although, it is unlikely that a notable surge will occur, as the Pound is still poised for losses.
Daily chart
The hourly chart for the GBP/USD pair reveals that the rebound might be short lived, as the 20 and 55-hour simple moving averages are moving in from the upside. It is most likely that they will not only stop the surge, but also provide the needed strength to force the Sterling below the first weekly support level at 1.2335.
Hourly chart
Traders mostly bullish
SWFX traders have not changed their opinion since Wednesday, as 63% of open positions remain long. In the meantime, 55% of trader set up orders were to sell the Sterling.
A similar situation is observed elsewhere. For example, 59% of positions open at OANDA are currently long. This is more than the share of shorts (41%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 63% of traders being long and 37% shorting 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 22 is around 1.26. Furthermore, the 1.28-1.30 and the 1.16-1.18 intervals are now the most popular ones, having 14% of the votes each. On the second place in terms of the votes are the 1.30-1.32 (12%), 1.18-1.20 (12%) and 1.24-1.26 (12%) intervals, followed also by the 1.32-1.34 interval, with only 11% of the votes. Moreover, 58% of all survey participants believe the Cable is to rise above 1.24.