Tuesday 8 Oct Coverage: Outlook for GBP Stable, Technical Forecasts and Predictions Likely to Be Today's Main Driver

Traders have proved nervous with regards to selling the British pound sterling (Currency:GBP) in aggressive fashion, as such the near-term outlook for the UK currency has stabilised. However, the UK currency could come under pressure with a lack of real data due out of the UK today. Technical forecasts, positioning and considerations are likely to remain a key driver of the British pound.

Today's latest exchange rates:

• The pound euro exchange rate is 0.07 pct down on Monday night's closing level at 1.1846.
• The pound dollar exchange rate is 0.14 pct lower at 1.6074.
• The pound Australian dollar exchange rate is 0.56 pct lower at 1.6976.
• The pound New Zealand dollar rate is 0.24 pct higher at 1.9338.
• The pound South African Rand exchange rate is 0.64 pct down at 1.60121.

NB: The above quotes are wholesale market quotes, your bank will affix a discretionary spread when making a retail offer. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.

16:30: At last, the calendar gets more exciting for GBP

After two day's of purely technical trading on GBP we finally get some real data to get stuck into on Wednesday morning.

All major data releases will come out at 09:30, so expect volatility as the data is processed.

Here are the headline releases:

Industrial Production (YoY) (Aug). Consensus forecasts are for -0.6%. An improvements on last month's -1.6%.

Manufacturing Production (YoY) (Aug). Consensus forecasts are for +1%. Last month read at -0.7%.

Total Trade Balance (Aug). Forecasts at £-2.050B. Last month = £-3.085B.

Goods Trade Balance (Aug). Forecasts = £-9.000B. Last month  = £-9.853B.

15:04: House prices predicted to increase 6.5% in 2014, but no bubble seen

Today RICS said house prices are expected to increase by 2.6% over the next 12 months and an average of 4.9% for each of the next five years.

These price expectations were 0.6% and 3.4%, respectively, at the start of 2013, illustrating the relatively recent turnaround in activity.

Barclays analyst Blerina Uruçi says her bank is predicting faster price increases, but a bubble is not expected:

"The RICS price increase expectations are slightly below our forecasts for house prices to increase by 3.0% in 2013 and 6.5% during 2014, after which we expect the rate of increase to moderate. While a pick-up in demand together with the continued supply constraints are likely to be supportive of house prices, the housing market is still likely to experience a gradual improvement rather than a bubble, in our view. We think prices are likely to be held in check by the continued deleveraging of the household balance sheets and slow income growth."

14:50: Data confirms Bank of England's next move is a reduction in stimulus

The ultimate driver behind a buoyant sterling remains bets amongst traders that the Bank of England will reduce stimulus earlier than it currently expects.

Omer Esiner at Commonwealth Foreign Exchange on today's data:

"Sterling found support once again overnight from strong economic data that encouraged confidence in the pace of recovery. The Royal Institute of Chartered Surveyors’ (RICS) report showed that British home prices rose at their fastest pace in 11 years last month and that overall sales were at a four-year peak. The data reinforces the view that the BOE’s next move (whenever that is) will be a reduction in stimulus."

14:01: Bullish Engulfing Candle calls for a Buy on pound sterling

Matt Weller at GFT calls a short-term buy on the GBP/USD:

"The GBP/USD rode a wave of volatility in today’s early European session trade as the pair flushed lower from previous resistance at 1.6100 before recovering just as quickly to break above 1.6100 resistance. This price action created a large Bullish Engulfing Candle on the 4hr chart, suggesting further gains are likely during today’s North American trade, with room up to the next Fibonacci retracements at 1.6155 (61.8%) and 1.6198 (78.6%).

12:45:Australian dollar in strong advance vs sterling

The lack of GBP-specific data has seen strong declines in GBP/AUD. See why today's Australian jobs data has boosted the Aussie.

11:07: General trend for GBP is higher

ICN Financial Markets update us with their view on GBP/USD:

"The upside move yesterday was triggered by failing to break 1.6010 levels, meanwhile it remained limited and wasn’t able to change the negative outlook that was triggered by stabilising above 1.6170 earlier. Trading below the referred to level is negative but breaking 1.6010 will confirm this outlook.

"The trading range for today is among the key support at 1.5910 and key resistance at 1.6165.

"The general trend over short term basis is to the upside as far as areas of 1.5280 remains intact targeting 1.6540."

11:05: Euro strength tempered by German data miss

German Factory Orders s.a. (MoM) (Aug) came in at -0.3%. A big miss considering analysts had forecast a reading of 1.2%.

10:34: Investors send euro higher

It's all about the euro today with German Trade Balance figures come in at +€15.6B, ahead of expectations for a release of +€15.1B.

At the top of the hour we get monthly factory orders. If we get another good result here expect sterling to head lower against the shared currency.

08:56: Investors unwilling to aggressively sell GBP

"Investors are apparently unwilling to sell cable aggressively below 1.60 before the US budget debate has a solution and thus range trading between 1.6050 and 1.6150 is likely to continue for now. Likewise, EUR-GBP is now expected to struggle mostly at around 0.8450." - UniCredit Bank.

08:40: Pound sterling predicted to consolidate

Emmanuel Ng at OCBC Bank on the outlook for the sterling to US dollar exchange rate today:

"The pair may attempt to continue to base build off the 1.6000 floor pending further US fiscal cues while local data prints still remain slightly supportive of the pair. Any breach above 1.6100 may see a test towards 1.6160."

08:25: Overnight data shows house prices on a tear higher

Overnight it was revealed that UK house prices rose at their fastest pace in 11 years.

The seasonally adjusted house price balance by the Royal Institution of Chartered Surveyors jumped to +54, its highest level since mid-2002 and well above the reading of +45 predicted by analysts polled by Reuters.

Peter Bolton King, RICS Global Residential Director says he is forecasting house prices to continue their ascent:

"It's encouraging that the market is starting to improve in all parts of the country. The supply of properties going on sale lagged far behind demand.

"This imbalance is likely to result in further upward pressure in prices over the coming months, particularly in the nation's hot spots."

The news comes as the UK sees the second phase of the Help to Buy scheme launched; analysts believe this will likely propel prices yet higher.