Cable Continues Slide on Poor Mortgage Data

by on May 27, 2014 11:13 am BST

Cable continues to slide lower on weak mortgage data. The BBA mortgage approvals fell to an eight-month low in April, as home loans dropped from 45,045 to 42,173, according to the British Bankers Association (BBA). Analysts were expecting a smaller drop to 45,200 approvals, while March mortgage approvals were revised lower from 45,900 to 45,000.

This follows data released by mortgage lender Halifax, indicating that housing prices declined for the second-straight month, which is cultivating worries of a housing sector slowdown. The Bank of England (BoE) has been keeping an eye on the housing market, which was reaching bubble territory during the six years of ultra-low interest rates.

Cable remains lower in early-London trade, down .10 percent. Price action is centered around the 20 daily EMA and has not seen much directional trade since being rejected off of former channel resistance. A close below the 20 EMA will likely signal a test of support at 1.6785. Although, the +/- DMI divergence still remains in favor of the bulls. A pullback to resistance at 1.6845 is probable. However, this level has been held on the last two attempts to break, each following a steeper decline.

1D Chart of GBPUSD

1D Chart of GBPUSD