EU REAL ESTATE: Workspace Group (WKPLN): Outlook Negative

• In FX, support to watch in EURUSD is 1.1542, the Oct 9 low. Clearance of this level is required to cancel a recent bullish signal and this would confirm a resumption of the bear cycle that started Sep 17. A break would open 1.1516, the 76.4% retracement of the Aug 1 - Sep 17 bull leg, and clearance of 1.1516 would expose key support at 1.1392, the Aug 1 low. Price needs to trade above 1.1728, the Oct 17 high, to strengthen a bull theme.
• A bear threat in GBPUSD remains present and this week’s sell-off strengthens this theme. The pair has breached 1.3249, the Oct 14 low and a bear trigger. The break confirms a resumption of the downtrend that started Sep 17 and sights are on 1.3220 next (pierced), a 0.764 projection of the Sep 17 - 25 - Oct 1 price swing. The break lower has also exposed key support at 1.3142, Aug 1 low. Initial resistance is 1.3377, the 20-day EMA.
• The trend condition in USDJPY is unchanged, it remains bullish and recent weakness appears to have been a correction. Attention is on key resistance at 153.27, the Oct 10 high. A break of this level would confirm a resumption of the medium-term uptrend. This would open 153.82, a 1.618 projection of the Sep 17 - 26 - Oct 1 price swing. Note that MA studies are in a bull-mode position, highlighting a primary uptrend. First important support to watch lies at 151.19, the 20-day EMA.

Mortgage activity increased last week as mortgage rates continued to ease to now their lowest since Sep 2024 when Fed terminal rate expectations were at cycle lows. New purchase applications have seen relatively limited boost this year from the almost 70bp decline in 30Y mortgage rates over the year to date. 

• MBA composite mortgage applications bounced 7.1% (sa) last week after the unwound of a refi-driven bounce in the first half of September had slowed.
• Refis increased a solid 9.3% after 4.0% the week prior, whilst new purchase applications increased 4.5% to recover from the -5.2% the week prior was its largest weekly decline since late July.
• Levels relative to 2019 average for context: composite 72%, new purchases 63%, refis 76%.
• The modest increase in activity came on the back of a further decline in 30Y mortgage rates, -7bps to 6.30% for a combined 16bp drop over the past four weeks. 6.30% is the lowest since Sep 2024 at around the time of cycle lows for Fed terminal rate expectations.
• Spreads to 10Y swap rates saw a tightening to 277bps for a new ytd low but it’s only a small move vs the ~280bp averaged since mid-September. Recall, this is down from a rough range of 300+/-5bp seen for multiple months after April reciprocal tariff announcements and is back a little below the 285bp averaged in Q1.
• 30Y mortgage rate spreads to Treasury yields meanwhile remain close to lows since Mar 2022 for the 10Y although with downward progress continuing to have broadly plateaued – see chart.

• GBPUSD: Renewed sterling weakness and a slightly stronger dollar have pressured GBPUSD to a fresh 2-month low on Wednesday. Pessimism for GBP continues to reverberate amid increasing signs that UK Chancellor Reeves will have to raise income tax at the November 26 budget to fill a widening fiscal hole. As noted, cable has breached the 1.3249 bear trigger and Oct 14 low, confirming a resumption of the downtrend, placing the focus on the next target of 1.3142, Aug 1 low.
• GBPAUD: While Australian CPI has been the dominant driver for Aussie outperformance, we did highlight yesterday that GBPAUD was threatening a move back below an important pivot at 2.03. Sure enough, a break of the recent cycle lows at 2.0244 has significantly boosted downside momentum, with the cross printing below 2.00 this morning, the lowest level in 8 months. Bearish developments signal scope for a more protracted selloff towards the year’s lows around 1.96, gaining in likelihood given the risks surrounding the upcoming UK budget and the hawkish risks attached to the November RBA decision.
• EURGBP has moved steadily higher following the break of 0.8769 on Tuesday, narrowing the gap to 0.8835, the May 3 2023 high. Above here, 0.8865 provides the next target, the 1.764 projection of the Sep 15 - 25 - Oct 8 price swing.
• GBPCAD has also declined 0.5% today, as we approach today’s BOC decision. Downward momentum picked up on a break of trendline support yesterday, drawn from the January lows. Spot has traded to within 2 pips of the first notable target at 1.8405, the Sep 03 low. 1.8230 is the next obvious chart target for the move.