A correction in the market has been brewing for a while. All this time, the market was looking for any excuse to start the corrective move up. The release of preliminary Q4 GDP in the eurozone became such a reason. The figure came well above market expectations and boosted the euro. The single European currency, in turn, drove the pound sterling up.
Today, the United Kingdom will present its mortgage market data. Notably, the forecasts are gloomy, so that the pound sterling may come under pressure. Net lending to individuals in the country is estimated to fall to £4.6 billion from £4.9 billion in the previous month.
Net borrowing of the mortgage debt by individuals in the United Kingdom is expected to drop to £3.6 billion versus £3.7 billion a month earlier. Meanwhile, the number of mortgage approvals for house purchases could reach 65,000, while it came at 67,000 in the previous month.
In other words, it is about a decrease in the mortgage market, which indicates a possible decline in consumer spending. Therefore, the pound sterling is expected to feel pressure today.
At the same time, the British currency may find support in case of strong labor market results in the eurozone that could push the euro up. If so, the sterling will follow suit. However, this is highly unlikely to happen.
Disappointing macroeconomic results are also expected in the United States, where the number of job openings is forecast to tumble by 42,000, which is a negative factor. At the same time, it could hardly be perceived as a significant drop since the reading should decrease to 10,520,000 versus 10,562,000 in the previous month.
Moreover, the state of the labor market continues to improve. Therefore, it is obvious why the number of job openings is falling - it reflects a rise in employment. All in all, this will be an insignificant decline that could hardly affect the market.
Technical View
The pound/dollar pair returned from the swing low of 1.3357 to 1.3450, which indicates a temporary slowdown in the bearish trend but not its end. The Relative Strength Index (RSI) exceeded 50 on the H4 chart. This signal confirms the correction stage.
The Alligator indicator on the H4 chart has a crossover of the MAs, reflecting a decrease in bearish sentiment. On the daily chart, the indicator is still signaling the continuation of the bearish trend in the market. On the daily chart, support is seen between 1.3170 and1.3200, and bearish sentiment is gradually increasing.
The upward correction is still relevant, so traders expect the pound to somewhat strengthen on the way to 1.3500. At the same time, the volume of long positions may gradually decrease, leading to the end of the upward correction and the resumption of the bearish trend.
As for complex indicator analysis, there is a signal to buy the instrument in the short term and intraday due to an upward correction. In the intermediate-term, the continuation of the bearish trend signals to sell the pair.