The GBP/USD has declined for the fourth consecutive day even after the robust UK housing price index data. It fell to 1.3670, the lowest level since February 4.
UK housing sector recovery continues
The UK housing sector is firing on all cylinders, helped by the relatively low-interest rates and government incentives. According to Halifax, a company owned by Lloyds Bank, house prices rallied by 1.1% in March after holding stable in February. This performance led to year-on-year growth of 6.5%, the fastest growth since June last year.
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In the past few months, the housing sector has been helped by the Bank of England (BOE), which has brought interest rates to record lows. This has pushed mortgage providers to lower their overall rates. At the same time, the government has removed some housing taxes in a bid to stimulate the sector. Furthermore, consumer spending is the biggest constitute of the UK economy.
Before the recent decline, the GBP/USD price has rallied because of the strong recovery of the UK economy. While the government debt has soared, the unemployment rate has remained lower than in other countries. The country has also been a leader in coronavirus vaccinations. It has already vaccinated more than 30 million ahead of the reopening of the economy.
Notably, the GBP/USD is falling because of the strong dollar. The greenback has rallied against all currencies in the dollar index. This is mostly because of the rising bond yields as investors price in a stronger recovery of the US economy.
The country’s economy inflation has risen to 1.7% while the overall unemployment rate has dropped to 6.0%. This trend will continue as the Biden administration prepares a major infrastructure push.
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GBP/USD technical forecast
The GBP/USD price declined to an intraday low of 1.3670 as the dollar strength continued. This price is notable since the pair has found a substantial resistance there before. It has also moved below the 25-day and 15-day moving averages. It is also below the Ichimoku cloud, which is considered a bearish move. It also approached the second support of the standard pivot points.
Therefore, while a double-bottom pattern is usually a bullish signal, a break below 1.3670 will be a victory for bears. This will see the pair continue falling as bears target the third support of 1.3600.