Forex Market: GBP/USD daily trading outlook

Yesterdays trade saw GBP/USD within the range of 1.5305 – 1.5168. The pair closed the day 0.56% lower at 1.5201, falling for a seventh straight session, after it settled last week 1.3% lower.

At 07:06 GMT today GBP/USD was up 0.07% for the day to trade at 1.5211. The cross held in a daily range of 1.5193 – 1.5228.

Fundamentals

United Kingdom

Activity growth in the United Kingdom’s sector of construction probably accelerated last month, with the corresponding PMI projected to come in at 55.0 from 54.2 in April.

The index is based on a survey, encompassing managers of companies which operate in the construction sector. They are asked about their estimate regarding current business conditions (new orders, output, employment, demand in the future). Values above the key level of 50.0 signify that activity in the sector has expanded. It is considered a leading index, reflecting the construction industrys health and, thus, the overall economic performance.

Higher-than-projected readings would certainly heighten the appeal of the pound. The Chartered Institute of Procurement & Supply (CIPS) is to announce the official reading at 08:30 GMT.

Meanwhile, the number of mortgage approvals in the United Kingdom was probably at 63 000 in April, according to experts’ expectations, up from 61 340 during the prior month.

Mortgage approvals measures the number of mortgages approved for purchases of homes by the Bank of England and are considered a leading indicator, reflecting the health of the country’s housing market. In case the number of mortgage approvals increases more than anticipated, this implies potentially higher demand in the nations housing sector and, respectively, a positive impulse for the overall economy. Therefore, the national currency would also be supported, but to a limited extent, since around two thirds of all mortgages are covered by the BBA Mortgage Approvals data that are released a few days earlier. Bank of England will publish the official numbers at 08:30 GMT.

United States

Redbook Research Inc. will release its Johnson Redbook Index for the seven days through May 30th at 12:55 GMT. This metric measures the growth in US retail sales and is based on sales data provided by around 9 000 large general merchandise retailers representing over 80% of the equivalent “official” retail sales series published by the Commerce Department. The year-over-year value of the metric was at 1.6% for the seven days through May 23rd, while the month-on-month reading came in at -0.3%, a second straight weekly contraction.

A separate report might show that factory orders in the United States probably rose 0.2% in April from a month earlier, following a 2.1% surge in March, which was the biggest increase in eight months, boosted by transport equipment. Excluding the sector of transportation, factory orders dropped 0.1% in March.

This indicator presents the total value of new purchase orders placed at manufacturers for durable and non-durable goods, and can provide insight into inflation and growth in the US manufacturing sector. In case new orders rose more than anticipated, this would have a bullish effect on the greenback. The US Census Bureau will release the official data at 14:00 GMT.

Meanwhile, total vehicle sales in the US probably rose to the annualized rate of 17.00 million in May after dropping to 16.50 million in April, Autodata Corp is expected to report at 20:00 GMT. This indicator is tightly correlated to consumer spending and consumer confidence. During times of economic distress, individuals typically pare spending on items that are not of first necessity, such as cars, while companies are also less likely to purchase new vehicles. A larger-than-expected increase in the number of vehicle purchases should be taken as bullish for the US dollar, and vice versa.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.5225. In case it penetrates the first resistance level at 1.5281, it will encounter next resistance at 1.5362. If breached, upside movement may attempt to advance to 1.5418.

If the cross drops below its S1 level at 1.5144, it will next see support at 1.5088. If the second key support zone is breached, downward movement may extend to 1.5007.

In weekly terms, the central pivot point is at 1.5345. The three key resistance levels are as follows: R1 – 1.5455, R2 – 1.5620, R3 – 1.5730. The three key support levels are: S1 – 1.5180, S2 – 1.5070, S3 – 1.4905.