Forex Market: GBP/USD daily forecast

During yesterday’s trading session GBP/USD traded within the range of 1.6822-1.6884 and closed at 1.6853, losing 0.15% on a daily basis.

At 7:49 GMT today GBP/USD was losing 0.09% for the day to trade at 1.6840. The pair touched a daily low at 1.6834 at 7:20 GMT.

Fundamental view

United Kingdom

At 11:00 GMT Bank of England is to announce its decision on monetary policy. The benchmark interest rate will probably be left unchanged at 0.50%, where it has been set at the meeting on policy on February 5th 2009. Short-term interest rates are of utmost importance for the valuation of national currencies. In case the central bank left intact or raised borrowing costs, this would have a bullish effect on the sterling.

At the same time, the monthly pace of bank’s monetary stimulus will probably be left intact as well, at 375 billion GBP. The central bank issues new money in order to purchase gilts from private investors such as pension funds and insurance companies. In case monetary stimulus is increased (in order to further spur economic growth), this will usually devalue nation’s currency.

United States

The initial jobless claims in the US probably rose to 304 000 in the week ended August 2nd, according to the median estimate by experts, from 302 000 a week ago.

The indicator measures the number of applications for unemployment benefits that are recorded each week in a report prepared by the Bureau of Labor Statistics in the United States. Initial application or (Initial Claim) means a completed document from an unemployed person before the local government, which is considered a claim for compensation or the possibility of compensation. The completion of the initial claim marks the beginning of a period in which the applicant receives unemployment benefits. The survey covers the number of applications registered in the previous week and is an important indicator concerning the health of the US labor market.

The statistical arm of the US Department of Labor will release an official report at 12:30 GMT today. If jobless claims rose less than expected, this will provide support for the US dollar.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.6853. In case GBP/USD manages to breach the first resistance level at 1.6884, it will probably continue up to test 1.6915. In case the second key resistance is broken, the pair will probably attempt to advance to 1.6946.

If GBP/USD manages to breach the first key support at 1.6822, it will probably continue to slide and test 1.6791. With this second key support broken, the movement to the downside will probably continue to 1.6760.

In weekly terms, the central pivot point is at 1.6879. The three key resistance levels are as follows: R1 – 1.6944, R2 – 1.7066, R3 – 1.7131. The three key support levels are: S1 – 1.6757, S2 – 1.6692, S3 – 1.6570.