Forex Market: GBP/USD daily trading outlook

Yesterday’s trade saw GBP/USD within the range of 1.5080-1.4914. The pair closed at 1.5037, adding 0.74% on a daily basis after a 0.13% gain the prior session.

At 7:00 GMT today GBP/USD was down 0.27% for the day at 1.4995. The pair held in a daily range of 1.4992 – 1.5041.

Fundamentals

United Kingdom

Annualized retail sales in the United Kingdom probably rose at a rate of 5.4% in March, according to the median forecast by experts, after in February sales were up 5.7%. If so, this would be the 24th consecutive month of sales growth. In monthly terms, retail sales probably increased 0.4% during March, following a 0.7% jump a month earlier.

Annualized retail sales, without taking into account fuel sales, probably rose 5.4% last month, following a 5.1% gain in February. Month-on-month, core retail sales are projected at +0.4% for March.

This is a short-term indicator which provides key information about consumption on a national scale. Higher retail sales suggest stronger consumer demand, confidence, and respectively, economic growth. Therefore, in case the index of retail sales increased at a faster-than-projected pace, this would be pound positive. The Office for National Statistics will publish the official report at 8:30 GMT.

United States

The number of people in the United States who filed for unemployment assistance for the first time during the week ended April 18th probably increased to 290 000 from 294 000 in the previous seven days. The 4-week moving average, an indicator used to iron out week-to-week volatility, was at 282 750 last week, slightly above the preceding weeks upward-revised average.

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

The number of continuing jobless claims probably rose to 2 300 000 during the week ended April 11th from 2 268 000 the previous period. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago. The Department of Labor is to release the weekly report at 12:30 GMT.

Later in the day, a preliminary report by Markit Economics will likely show that manufacturing activity growth in the United States eased a bit in April, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 55.5. The gauge was at 55.7 in March.

Tim Moore, Senior Economist at Markit commented in Marchs report: “The U.S. manufacturing sector is clearly regaining momentum after a slow start to 2015. Stronger new order growth and rising input buying in March should help set the scene for improving production trends into the second quarter of the year. Moreover, job creation has remained resilient in recent months, and falling raw material costs continue to support operating margins.”

Values above the key level of 50.0 indicate optimism (expanding activity). In case the flash manufacturing PMI slowed down more than anticipated, this would have a certain bearish effect on the US dollar, and vice versa. The preliminary data by Markit Economics is due out at 13:45 GMT.

Sales of new homes

Sales of new single-family homes probably decreased to the seasonally-adjusted annual rate of 513 000 in March compared to a month earlier, according to analysts expectations. The index of new home sales surged to 539 000 in February, defying projections for a drop to 465 000 from 500 000 in January. This was the strongest performance in 7 years.

There are several points to watch out for when interpreting the New Home Sales numbers. First of all, houses that are not going to be sold immediately are not included in the statistics. As an example, the case when a house is commissioned to be built on an existing plot of land, that the purchaser owns.

Second, the statistics are taken at the point where a customer has signed a sales contract or has put a deposit down. At this point the house can be at any stage of construction.

Third, the sales figures are not adjusted to take into account the sales contracts, which are eventually canceled by the builder or the customer. However, the same house is not included in any subsequent count when it is eventually sold to another customer.

This report has a significant influence on the Forex market, because increasing new home sales can lead to a rise in consumption, for example. The new home sales index is also an excellent indicator of any economic downturns or upturns due to the sensitivity of consumers income. When, for instance, new home sales drop over several months, this usually is a precursor to an economic depression.

In case the index dropped more than anticipated, this would usually mount selling pressure on the greenback, and vice versa. The Census Bureau is to report the official figure at 14:00 GMT.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.5010. In case it penetrates the first resistance level at 1.5107, it will encounter next resistance at 1.5176. If breached, upside movement may attempt to advance to 1.5273.

If the cross drops below its S1 level at 1.4941, it will next see support at 1.4844. If the second key support zone is breached, downward movement may extend to 1.4775.

In weekly terms, the central pivot point is at 1.4860. The three key resistance levels are as follows: R1 – 1.5157, R2 – 1.5352, R3 – 1.5649. The three key support levels are: S1 – 1.4665, S2 – 1.4368, S3 – 1.4173.