- 53% of all pending orders are to sell the British Pound
- 60% of traders hold long positions
- Immediate resistance is around 1.2485
- The closest support is circa 1.24
- Upcoming Events: US Durable and Core Durable Goods Orders, US Pending Home Sales
Official data released on Friday revealed that the number of mortgage approvals in the United Kingdom jumped to a 12-month high in January. The British Bankers' Association reported mortgage approvals rose to 44,657 in January, compared with December's 43,581 reading. The reported month's figure was the highest since January a year ago, when mortgage approvals climbed to 45,794. Furthermore, the BBA reported its gross mortgage borrowing surged 6.3% year-over-year to £13.8B in January, while net mortgage borrowing was 2.4% higher in the same month in 2015. In addition, remortgaging approvals grew nearly 16%, being mainly influenced by record-low interest rates in the UK. Moreover, the unsecured consumer borrowing increased to an annually adjusted rate of 6.7% in spite of weaker retail sales. Consumer credit growth remained mainly driven by an increase in personal loans amid slowdown in credit card loans.
Overall, the Bank of England is likely to observe closely tendencies of borrowing more as household income is set to terminate growth this year.
US Durable & Core Durable Goods Orders
On Monday all focus is on the US fundamentals, such as the 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 final figure shows the state of US production activity. Core Durable Goods Orders, however, exclude the transport sector. Another data release worth paying attention to today will be the US Pending Home Sales. They are a leading indicator of trends of the housing market in the US. They capture residential housing contract activity of existing single-family homes. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD.
GBP/USD remains on the back foot
Friday ended with the Cable erased most of that week's gains, with the bearish momentum persisting through the weekend. The main gauge of such bearish developments were concerns over another possible Scottish independence referendum; Brexit turmoil keeps weighing on the Pound. The GBP/USD pair still faces a tough demand cluster around 1.24, which is expected to limit the losses as it has done through all of February so far. A close below 1.2380 could lead to the Sterling slumping back to 1.20, with political factors driving this weakness. However, a close above still brings hope for a potential recovery towards at least 1.27.
Daily chart
The Cable's breach of the triangle pattern's resistance line was far-fetched, as the rally ended after the pair was unable to climb over the 1.2570 level. A sharp spark of bearish momentum was so intense that it led to the support line at 1.2430 getting pierced as well, leaving the GBP/USD even more vulnerable to being affected by outside factors, such as politics.
Hourly chart
Traders mostly bullish
There are 60% of traders holding long positions today, while 53% of all pending orders are to sell the British Pound.
A slightly less optimistic situation is observed elsewhere. For example, 60% of positions open at OANDA are currently long. This is more than the share of shorts (40%), barely sufficient for the sentiment to be called bullish. Meanwhile, sentiment at Saxo Bank is also bullish, with 59% of traders now being long and the other 41% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
By the end of the next three months traders expect the Cable to rise above the 1.22 major level, as 59% of survey participants believe so. While the current price is around 1.24, the average forecast for May 27 is 1.2544. The 1.20-1.22 interval is now the most popular price interval, having 17% of the votes, while on the second place is the 1.34-1.36 price range, with 15% of poll participants choosing it. Furthermore, the 1.28-1.30 interval was chosen by 13% of the voters.