- The share of sell orders increased to 59% from 55%
- 65% of traders have a positive outlook towards the British currency
- Immediate resistance is around 1.2330
- The closest support is at 1.2250
- Upcoming Events: US New Home Sales; Revised UoM Consumer Sentiment;
New orders for US-made capital goods advanced more than expected in November due to strong demand for machinery and primary metals, suggesting some of the oil-related drag on manufacturing was starting to fade. According to the Commerce Department non-defense capital goods orders excluding aircraft, a went up 0.9% after an unrevised 0.2% gain in October. Moreover, there were increases in orders for electrical equipment, appliances and components, as well as computers and electronic products. A drop in oil prices last year, together with a surge in the dollar, pressured manufacturing. Much of the impact has been through weak business spending on equipment, which has contracted for four consecutive quarters. However, with oil prices hovering above $50 per barrel, manufacturing, which accounts for 12% of the US economy, is starting to perk up. In the meantime, the US economy soared at a faster pace last quarter than previously estimated, but the stronger gains only help bring the year's growth rate back in line with the long, sluggish expansion. According to the Commerce Department the US GDP expanded at an inflation- and seasonally adjusted annual rate of 3.5% in the third quarter.
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.
Minor US Data before Christmas
After the huge data dump on Thursday there are still some leftovers coming from the US. New US Home Sales and the Revised UoM Consumer Sentiment index are set to be released at 15:00 GMT. Both of these data releases are rated as medium impact by many in the markets. However, in the recent six months they have not made a single notable impact on the markets.
GBP/USD falls below 1.23 mark
The Pound was rather unchanged against the Greenback on early Friday morning. However, the previous session went exactly as forecasted. The rebound of the Sterling was not sustained, and in the second half of Thursday's trading session the currency exchange rate once more plummeted, as it fell through the weekly S1 at 1.2335 and ended the session as low as 1.2284. The rate did not fall to the next support level at 1.2251 because it was stopped by the lower Bollinger band. However, on Friday the band has also moved to the 1.2246 level, opening the way for further downfall.
Daily chart
The hourly chart showed that the GBP/USD pair was in a beautiful descending channel from the monthly PP to the monthly S1. If the pair continue to trade in accordance with the pattern, there will be a rebound from the monthly S1 at 1.2251 before the fall continues.
Hourly chart
Traders mostly bullish
65% SWFX positions were long on Friday, compared to 63% on Thursday. Meanwhile, 59% of trader set up orders were to sell the Pound.
A similar situation is observed elsewhere. For example, 60% of positions open at OANDA are currently long. This is more than the share of shorts (40%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 65% of traders being long and 35% 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 23 is around 1.26. Furthermore, the 1.28-1.30 and the <1.18 intervals are now the most popular ones, having 14% of the votes each.