British pound soars on upbeat UK lending data

OctaFx Analyst Team OctaFX

The British pound rose today as traders reacted to upbeat economic data from the UK. The numbers showed that mortgage approvals in June rose to more than 40,000 from the previous month’s 9.2k. The number passed the 33.9k that analysts were expecting. Mortgage lending in the month rose to £1.89 billion from the previous £1.28 billion while consumer credit showed some improvements. These numbers, together with the strong PMI data released last week, showed that the UK economy is making a stronger recovery than what most analysts were expecting.

The US dollar declined slightly against most currencies as traders waited for the Federal Reserve interest rate decision that will come out at 18:00 (GMT). Analysts expect that the central bank will leave the main lending rate unchanged. They are also looking for more hints about what the bank intends to do as the US economy weakens. For example, the bank could pledge to follow the route of the BOJ and the RBA and implement yield curve control. It could also signal that interest rates will remain at the present range for a longer period. Also, the bank could signal its willingness to purchase more assets.

The price of crude oil is little changed today as traders await the official inventory data from the United States. The EIA will release the data at 14:30 GMT. Analysts expect that the inventories build up will decline from the previous week’s 4.8 million to 357k. Yesterday, data from the American Petroleum Institute (API) showed that inventories dropped by more than 6.8 million barrels. The inventories data will come a day ahead of Royal Dutch Shell’s second quarter earnings.

GBP/USD

The GBP/USD pair rose to the highest level since March 10 as investors reacted to the strong lending data. On the daily chart, the pair is trading above the 50-day and 100-day exponential moving averages. The accumulation and distribution indicator has also jumped to the highest level since March. The MACD has also been rising. Therefore, the pair is likely to continue rising as bulls target the next resistance at 1.3050.

XBR/USD

The XBR/USD pair is trading at 44.11, which is in the same range it has been in the past few weeks. As a result of the consolidation, the price is along the short and longer-term moving averages. Also, the Average True Range (ATR), which is a good measure of volatility, dropped to the lowest level since early this month. Therefore, the price is likely to experience a break out in either direction in the near term.

EUR/USD

The EUR/USD pair declined to an intraday low of 1.1723 as the number of coronavirus cases in Europe continued to rise. The price is slightly below the middle line of the Bollinger Bands on the hourly chart. Also, the accelerator oscillator has moved below the neutral line. It is also between the range shown in red. Therefore, the outlook for the pair is neutral, with the main support and resistance being at 1.1700 and 1.1780.

Author

OctaFx Analyst Team

OctaFX

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