Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View More
GBP Forecast: Pound Pressure Despite UK Housing Prices Beat

GBP Forecast: Pound Pressure Despite UK Housing Prices Beat

Warren Venketas, Analyst
What's on this page

POUND STERLING TALKING POINTS

  • UK Nationwide housing prices surprised to the upside but still paints a bleak picture overall.
  • US data in focus next week.
  • Rectangle breakout potential.
GBP Forecast
GBP Forecast
Recommended by Warren Venketas
Get Your Free GBP Forecast
Get My Guide

GBP FUNDAMENTAL BACKDROP

The British pound initially reacted favorably to better than expected housing prices (see economic calendar below) however, markets quickly turned negative as the realization that the UK housing market is slowing down both YoY and MoM respectively.

Trade Smarter - Sign up for the DailyFX Newsletter

Receive timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

Naturally, an environment with higher interest rates has been weighing down housing prices due to lesser demand from the UK public. Fears of a recession in the UK will likely limit pound upside in Q1 of 2023 especially if the housing market continues to deteriorate. The impact on GBP should theoretically be adverse with lesser housing demand resulting in softer inflation and a more dovish Bank of England (BoE). Should a recession ensue, the USD will then utilize its safe-haven appeal to attract investors away from the UK economy leaving cable exposed to subsequent downside.

ECONOMIC CALENDAR

image1.png

Source: DailyFX Economic Calendar

TECHNICAL ANALYSIS

Introduction to Technical Analysis

Candlestick Patterns

Recommended by Warren Venketas

Start Course

GBP/USD 4-HOUR CHART

image2.png

Chart prepared by Warren Venketas, IG

The 4-hour GBP/USD chart shows price action remaining within the evolving rectangle pattern (pink) sandwiched between the 1.2000 and 1.2100 psychological levels. There has been no real conviction away from the 200-day SMA (blue) either but the first week of 2023 holds some high impact U.S. data including ISM PMI’s, FOMC minutes and Non-Farm Payrolls (NFP) which could provide the catalyst to breakout from the consolidatory pattern currently underway.

Key resistance levels:

  • 1.2154
  • 1.2100
  • 200-day SMA

Key support levels:

  • 1.2000
  • 1.1900

BULLISH IG CLIENT SENTIMENT

IG Client Sentiment Data (IGCS) shows retail traders are currently LONG on GBP/USD, with 53% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment but due to recent changes in long and short positioning we arrive at a short-term upside bias.

Contact and followWarrenon Twitter:@WVenketas

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES