The pound pared losses against the U.S. dollar on Thursday, Since data showed that U.S. existing home sales rose far more-than-expected last month.
Daily Technical Analysis:
GBP/USD has tested SMA5 yesterday while SMA15 has not been tested for last 24 days. Market SMAs are now contracting and moving in bullish sequence, whereas GBP is moving between SMA5 and SMA10.
RSI is showing decreasing Bullish strength with 76% reading. RSI is now moving in uptrend with a downward direction at resistance (70%). Where it may take a downward correction.
Upper and Lower bands have closed expansion, while middle band is moving upward direction with expended bands, showing a decreasing bullish volatility. Market is moving below upper band.
With Lutfi Magnet Theory market is 79% bullish, while with adjustments 122% Bearish. Lutfi magnet theory is showing decreasing bullish sentiment, while adjustments are showing over bullish sentiments where it may take downward correction,
Concluding all Technical Analysis initial bias is bullish a further downward correction, where downward move below yesterday low at 1.6184 will pave the ground for corrective move to low at SMA10 1.6148, and then may extend the downward move to attempt Support at 1.6100. While on higher side break of high at 1.6247 will follow bullish move to attempt weekly high at 1.6272.
The pound pared losses against the U.S. dollar on Thursday, after data showed that U.S. existing home sales rose far more-than-expected last month, although concerns over the handling of the sovereign debt crisis in the euro zone continued to weigh. The report came after official data showed that U.S. housing starts rose by 2.3% in August to a seasonally adjusted 0.750 million, below expectations for a 2.85 increase to 0.765 million. The report also showed that the number of building permits issued in August fell 1% to a seasonally adjusted 0.803 million, compared to expectations for a decline of 1.8% to 0.796 million.
Also Wednesday, the minutes of the Bank of England’s latest meeting showed that policymakers voted unanimously to leave policy unchanged. BoE policymakers voted 9 to zero in favor of leaving U.K. interest rates unchanged at 0.5% at its meeting this month and also agreed to leave the quantitative easing program unchanged at GBP375 billion. The minutes revealed that some Monetary Policy Committee members saw stimulus “more likely than not” to be needed in the near-term, while only MPC member saw good case for more quantitative easing, despite the unanimous vote.
The National Association of Realtors said that existing home sales in the U.S. rose by 7.8% to a seasonally adjusted 4.82 million units in August, easily surpassing expectations for a 2% increase to 4.55 million units.
Here is schedule for today’s important data:
Retail Sales: at 01:30pm. Retail Sales was up a modest 0.3% in August. The markets are predicting a sharp decline this month, with an estimate of -04%. Will the key consumer indicator surprise the markets with a strong reading?
CBI Industrial Order Expectations: Thursday, at 03:00pm. The diffusion index posted its worst reading of the year in August, with an awful -21 points. The markets are predicting some improvement this month, with an estimate of -14 points.
US Unemployment Claims at 05:30pm. The number of Americans filing initial claims for unemployment benefits edged up to the highest level in two months, reaching 382,000 claims, way above forecasts. The sharp rise of 15,000 claims was partly due to Hurricane Isaac, however this rise was worrisome enough for the Federal Reserve to warrant an open ended QE of $40 billion in Mortgage backed securities per month and low rates until 2015. A drop to 370,000 is forecasted now.
US Philly Fed Manufacturing Index at 07:00. The Philadelphia area manufacturing sector improved to -7.1 in August following -12.9 the preceding month. Economists expected the index to reach -5. Weaker demand from the EU and China as well as lower investments, hurt US factories. Another improvement to -4.1is anticipated this time.
GBP/USD opened the yesterday at 1.6244. After attempting high at 1.6269 the pair attempted low at 1.6184. The pair closed the day at 1.6220.
GBP/USD opened today at 1.6218