Forex Market: GBP/USD daily trading forecast

Yesterday’s trade saw GBP/USD within the range of 1.5134-1.5244. The pair closed at 1.5144, shedding 0.28% on a daily basis. The daily high has been the highest level since September 25th, when the cross registered a high of 1.5261.

At 7:07 GMT today GBP/USD was up 0.01% for the day to trade at 1.5148. The pair tested the range resistance level (R3), as it touched a daily high at 1.5169 at 2:30 GMT.

Today the cross may be influenced by a number of macroeconomic reports as listed below.

Fundamentals

United States

Balance of Trade

The deficit on US balance of trade probably expanded to USD 45.50 billion in August, according to market expectations. In July the trade gap shrank to USD 41.86 billion, which has been the lowest since February 2015, when a deficit of USD 35.40 billion was reported.

Total exports rose 0.4% to USD 188.5 billion in July. Exports of goods rose by USD 0.6 billion to reach USD 128.2 billion, supported by sales of automotive vehicles, parts, and engines (a USD 0.6 billion increase), industrial supplies and materials (a USD 0.3 billion increase) and nonmonetary gold (a USD 0.3 billion increase). Exports of consumer goods were USD 0.4 billion lower in July.

Total imports shrank 1.1% to USD 230.4 billion in July. Imports of goods fell by USD 2.7 billion to USD 189.6 billion, supported by lower purchases of consumer goods (a USD 2.6 billion decrease), pharmaceutical preparations (a USD 1.5 billion decrease) and cell phones and other household goods (a USD 1.3 billion decrease).

US exports to China went down 1.9% in July, while imports from China shrank 0.2%. At the same time, shipments to Canada dropped 8.3%, while exports to the European Union decreased 5.3% in July.

In case the trade gap expanded more than anticipated in August, this would have a strong bearish effect on the US dollar, because of the potential negative contribution to the countrys Gross Domestic Product. The official trade data are due out at 12:30 GMT.

Bond Yield Spread

The yield on UK 2-year government bonds went as high as 0.611% on October 5th, after which it closed at the exact same level to add 6.2 basis points (0.062 percentage point) compared to October 2nd.

The yield on US 2-year government bonds climbed as high as 0.617% on October 5th, after which it fell to 0.605% at the close to add 2.4 basis points (0.024 percentage point) compared to October 2nd.

Meanwhile, the yield on UK 10-year government bonds soared as high as 1.793% on October 5th, after which it slid to 1.792% at the close to add 9 basis points (0.09 percentage point) compared to October 2nd. It has been the first increase in the past three trading days.

The yield on US 10-year government bonds climbed as high as 2.063% on October 5th, after which it slipped to 2.051% at the close to add 6 basis points (0.06 percentage point) compared to October 2nd.

The spread between 10-year US and 10-year UK bond yields shrank to 0.259% on October 5th from 0.289% on October 2nd. The October 5th yield difference has been the lowest one since September 17th, when the spread was 0.234%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:

R1 – 1.5154
R2 – 1.5164
R3 (range resistance) – 1.5174
R4 (range breakout) – 1.5205

S1 – 1.5134
S2 – 1.5124
S3 (range support) – 1.5114
S4 (range breakout) – 1.5084

By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:

Central Pivot Point – 1.5176
R1 – 1.5247
R2 – 1.5312
R3 – 1.5383

S1 – 1.5111
S2 – 1.5040
S3 – 1.4975