Forex Market: GBP/USD daily trading forecast

Yesterday’s trade saw GBP/USD within the range of 1.6023-1.5867. The pair closed at 1.5977, shedding 0.16% on a daily basis.

At 8:34 GMT today GBP/USD was up 0.02% for the day to trade at 1.5976. The pair held in a daily range of 1.5955-1.6002.

Fundamental view

United Kingdom

A survey by Halifax Bank of Scotland (HBOS), the largest mortgage lender in the United Kingdom, showed that home values rose at an annualized pace of 8.8% last month, trailing projections for 9.1%. In September prices of homes, purchased with loans from the bank, climbed 9.6% on annual basis.

In monthly terms, prices slid by 0.4% in October, defying expectations for a 0.4% jump, while Septembers reading was revised down to 0.4% from initially estimated at 0.6%.

Annualized industrial output in the United Kingdom probably expanded 1.5% in September, following a 2.5% gain during the preceding month, which would be the 13th straight month of expansion.

In monthly terms, industrial production probably increased 0.4% in September after remaining flat a month earlier. The index presents the change in the total inflation-adjusted value of production in sectors such as manufacturing, mining and energetics.

The United Kingdom’s annualized manufacturing production, a short-term indicator which accounts for almost 80% of nation’s industrial output, probably expanded 2.8% in September. In August manufacturing output rose at an annualized pace of 3.9%, the fastest since April.

In monthly terms, production probably increased 0.3%, accelerating from a 0.1% growth in August. As it is a key component of the country’s Gross Domestic Product, in case manufacturing production expanded more than projected, this would have a bullish effect on the sterling. The Office for National Statistics (ONS) will release the official industrial data at 9:30 GMT.

Market players also awaited the outcome of Bank of England’s interest rate decision.

At 12:00 GMT, Bank of England is to announce its decision on monetary policy. The benchmark interest rate (repo rate) will probably be left unchanged at the record low level of 0.50%.

At the same time, BoE’s monetary stimulus will probably be left without change as well, at 375 billion GBP. In case the scale of monetary stimulus is increased (in order to further spur economic growth), this will usually devalue the local currency.

United States

The Labor Department is expected to report at 13:30 GMT that the number of Americans who filed for initial unemployment benefits in the week ended November 1st stood at 285 000, down 2 000 from the preceding period.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims increased more than projected, this would have a bearish effect on the greenback.

The number of continuing jobless claims probably slid to 2.360 million from 2.384 million during the previous period.

Nonfarm productivity probably rose by 1.5% in the third quarter on a quarterly basis, a preliminary reading is expected to show, compared to a 2.3% gain during the previous three months. Unit labor costs are expected to have marked a 0.5% gain on the same basis, following a 0.1% contraction in the second quarter.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.5956. In case GBP/USD manages to breach the first resistance level at 1.6044, it may continue up to test 1.6112. In case the second key resistance is broken, the pair could attempt to advance to 1.6200.

If GBP/USD manages to breach the first key support at 1.5888, it may continue to slide and test 1.5800. With this second key support broken, movement to the downside could continue to 1.5732.

The mid-pivot levels for today are as follows: M1 – 1.5766, M2 – 1.5844, M3 – 1.5922, M4 – 1.6000, M5 – 1.6078, M6 – 1.6156.

In weekly terms, the central pivot point is at 1.6040. The three key resistance levels are as follows: R1 – 1.6140, R2 – 1.6281, R3 – 1.6381. The three key support levels are: S1 – 1.5899, S2 – 1.5799, S3 – 1.5658.