Forex Market: GBP/USD daily forecast

During yesterday’s trading session GBP/USD traded within the range of 1.6972-1.7001 and closed at 1.6983.

At 6:13 GMT today GBP/USD was losing 0.07% for the day to trade at 1.6972. The pair touched a daily low at 1.6968 at 4:25 GMT, breaching the first key support.

Fundamental view

United Kingdom

Net Consumer Credit in the UK probably rose to 0.8 billion pounds in June from a month ago, when net consumer credits amounted to 0.7 billion pounds.

The indicator measures still outstanding loans to consumers. Levels of consumer loans move in tune with the cycles of the economy, increasing during economic booms and falling during recessions. Growth in consumer credit suggests that consumers are able to pay higher costs, which can support the national economy. Too high levels of debt, however, can cause delays in economic growth in the long term.

In addition, Mortgage Lending in the UK probably slowed down to 1.9 billion pounds in June, from 2.0 billion pounds in the previous month.

Loans to individuals are two types: loans provided with property (eg mortgage) and cash consumer loans granted to persons residing in the UK. Loans granted to associations dealing with real estate are also included in the index. In addition to data concerning the value of loans, respondents provide information on the number of approved applications for mortgage loans. Data on mortgage loans differs from data of M4 money supply relative to individuals, because it includes loans to institutions other than banks and building associations, and loans to associations related to real estate.

At the same time, the number of mortgage approvals in the country probably jumped to 63 000 last month from 61 707 in May, that was the weakest number of approvals since July 2013.

Mortgage approvals are an important housing and mortgage market indicator, which is a supplement to the indicator measuring the value of loans, that can be seen as a gauge of the trend in gross mortgage lending. The number of mortgages approved in a month is used as an indicator of turnover in the housing market.

Bank of England will release an official report at 8:30 GMT. Higher than expected reading would bolster sterlings demand.

United States

Home values in 20 large cities throughout the United States probably rose at an annualized rate of 9.9% in May, preliminary analysts’ estimates showed. In April, home prices climbed at a rate of 10.82%, that was the weakest since February 2013. S&P/Case-Shiller will release the official rate at 13:00 GMT. Higher than expected reading would bolster greenbacks demand.

At the same time, confidence among US consumers probably improved in July. The corresponding index probably rose to a reading of 85.5 from 85.2 in June. The Conference Board research group is to announce the results from its survey, encompassing over 5 000 households in the country, at 14:00 GMT. If the gauge of confidence shows a better than expected performance, this would certainly heighten the appeal of the US dollar.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.6985. In case GBP/USD manages to breach the first resistance level at 1.6999, it will probably continue up to test 1.7014. In case the second key resistance is broken, the pair will probably attempt to advance to 1.7028.

If GBP/USD manages to breach the first key support at 1.6970, it will probably continue to slide and test 1.6960. With this second key support broken, the movement to the downside will probably continue to 1.6945.

In weekly terms, the central pivot point is at 1.7013. The three key resistance levels are as follows: R1 – 1.7063, R2 – 1.7151, R3 – 1.7201. The three key support levels are: S1 – 1.6925, S2 – 1.6875, S3 – 1.6787.