Yesterday’s trade saw GBP/USD within the range of 1.5155-1.5243. The pair closed at 1.5174, down 0.18% on a daily basis, while marking the seventh consecutive trading day of losses. In weekly terms, GBP/USD plummeted 2.25%, which has been the sharpest weekly loss since the week ended on March 8th 2015, when the cross depreciated 2.57%.
At 7:14 GMT today GBP/USD was down 0.03% for the day to trade at 1.5170. The pair attempted to test the range support level (S3), as it touched a daily low at 1.5157 at 4:10 GMT. It was also a test of the Mondays low.
Today the cross may be influenced by a number of macroeconomic reports and other events as listed below.
Fundamentals
United Kingdom
Consumer credit, Mortgage approvals
Lending to consumers in the United Kingdom probably expanded to GBP 1.200 billion in August from GBP 1.173 billion in July. It represents borrowing by the UK personal sector (individuals only) to fund current expenditures on goods and services, which are a driving force behind economic growth. Within a booming economy, however, excessively high levels of consumer lending may be taken as an indication that economy itself is set to overheat. It is so, because individuals tend to borrow money in order to live beyond their means. Within a sluggish economy, in case lending to individuals expanded more than projected, this would usually have a moderate bullish effect on the sterling. Bank of England (BoE) is to release the official numbers at 8:30 GMT.
At the same time, the number of mortgage approvals in the United Kingdom probably reached 70 000 in August, according to experts’ expectations, up from 68 764 during the prior month. If so, it would be the highest number of mortgages approved since January 2014, when a figure of 76 753 was reported. Mortgage approvals are considered as a leading indicator, reflecting the health of the country’s housing market. In case the number of mortgage approvals increased more than anticipated, this would imply potentially higher demand in the nations housing sector and, respectively, a positive impulse for overall economy. Therefore, the national currency would also be supported.
BoE Governor Carneys statement
At 19:40 GMT Bank of England Governor Mark Carney is to take a statement. High volatility of pound crosses is usually expected during such an event. Carney took over the post of Governor on July 1st 2013.
United States
CB Consumer Confidence Index
Confidence among consumers in the United States probably worsened in September, with the corresponding index coming in at a reading of 96.0, according to expectations, from 101.5 in August. The latter has been the highest index value since January, when the gauge was reported at 103.8.
This indicator measures the level of individuals confidence in the US economic development. It is considered as a leading indicator, as it gives an early insight into consumer spending, which accounts for most of the nations GDP.
The index has 1985 as a base year, when the base value was 100. This year was chosen, as it was neither a peak nor a bottom. The Consumer Confidence Index (CCI) is calculated on the basis of a household survey, which reflects consumers opinion on current conditions and future expectations regarding the US economy. Opinions on current conditions account for 40% of the index, while expectations of future conditions account for the remaining 60%. The surveys objective is to define consumer attitudes and buying intentions, while the data are filtered by age, income and region.
A sample of 5 000 households in the United States serves as a basis for the survey. Each month respondents give their opinion based on the answers to five questions: Current business conditions; Business conditions for the next six months; Current employment conditions; Employment conditions for the next six months; Total family income for the next six months. Respondents may answer each question as “positive”, “negative” or “neutral”.
Each of the five questions is given a “relative value”, or the positive responses are divided by the sum of the positive and negative responses. The relative value is then compared against each relative value from the base year (1985). The comparison of the relative values leads to the “index value” for all five questions. These index values are then averaged in order to form the value of the CCI.
In case the index fell more than anticipated, this would have a moderate bearish effect on the US dollar, as lower confidence suggests a lower willingness to spend and, respectively, a slower economic growth. The Conference Board research group is to publish the official index reading at 14:00 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.647% on September 28th, after which it slid to 0.601% at the close to lose 1.9 basis points (0.019 percentage point) compared to September 25th.
The yield on US 2-year government bonds climbed as high as 0.715% on September 28th, after which it fell to 0.676% at the close to lose 2.4 basis points (0.024 percentage point) compared to September 25th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, shrank to 0.075% on September 28th from 0.080% on September 25th. The September 28th yield spread has been the lowest one since September 18th, when the difference was 0.068%.
Meanwhile, the yield on UK 10-year government bonds soared as high as 1.834% on September 28th, after which it slid to 1.772% at the close to lose 7.3 basis points (0.073 percentage point) compared to September 25th, while marking a third straight day of gains.
The yield on US 10-year government bonds climbed as high as 2.169% on September 28th, after which it slipped to 2.098% at the close to lose 6.8 basis points (0.068 percentage point) compared to September 25th.
The spread between 10-year US and 10-year UK bond yields expanded to 0.326% on September 28th from 0.321% on September 25th. The September 28th yield difference has been the largest one since September 24th, when the spread was 0.386%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.5182
R2 – 1.5190
R3 (range resistance – green on the 30-minute chart) – 1.5198
R4 (range breakout – red on the 30-minute chart) – 1.5222
S1 – 1.5166
S2 – 1.5158
S3 (range support – green on the 30-minute chart) – 1.5150
S4 (range breakout – red on the 30-minute chart) – 1.5126
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.5294
R1 – 1.5455
R2 – 1.5728
R3 – 1.5889
S1 – 1.5021
S2 – 1.4860
S3 – 1.4587
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
