Pound Slumps on Soft Housing Data

Source: Forexnews.com

The sterling slumped across the board, falling to 203.52 versus the yen at 1.9678 against the dollar. The catalyst for the decline in the pound was economic data reinforcing the continued weakness in the UK housing market. Mortgage approvals in March fell to its lowest levels since 1993 at 64k, exceeding the estimated decline to 65k from 73k in February. Mortgage lending fell to 6.93 billion sterling, versus 7.45 billion sterling a month earlier.

In the coming session, housing data will again garner the market’s attention with April nationwide housing prices due out at 2:00 AM. Home prices are seen posting a 0.5% decline versus a 0.6% fall in March, while posting a flat reading compared with a 1.1% increase in the previous year.

We continue to remain bearish on the sterling, with initial support against the dollar seen at 1.9650, followed by 1.96 and 1.9540. Additional support is seen at 1.95, backed by 1.9470 and 1.9430. On the upside, resistance is seen at 1.97, followed by 1.9750 and 1.98. Subsequent ceilings will emerge at 1.9840, followed by 1.9880 and 1.9940.