Yesterday’s trade saw GBP/USD within the range of 1.5408-1.5480. The pair closed at 1.5419, down 0.14% on a daily basis, while extending losses from Tuesday. The daily low has been the lowest level since October 14th, when the cross registered a low of 1.5244. In weekly terms, GBP/USD went up 0.86% last week, marking its steepest gain since the week ended on September 13th, when the pair appreciated 1.71%.
At 7:18 GMT today GBP/USD was up 0.11% for the day to trade at 1.5433. The pair overshot the range resistance level (R3), as it touched a daily high at 1.5442 at 7:08 GMT.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United Kingdom
Retail sales
Annualized retail sales in the United Kingdom probably rose at a rate of 4.8% in September, according to the median forecast by experts, after in August sales increased by another 3.7%. If so, this would be the 30th consecutive month of sales growth and also the sharpest rate of increase since February, when retail sales climbed at an annualized rate of 5.4%.
In monthly terms, retail sales probably increased for a third consecutive month in September, going up 0.4%, according to market expectations. In August retail sales went up 0.2%, supported by sales of clothing.
Annualized retail sales, without taking into account fuel sales, probably surged 4.6% in September, following a 3.5% increase in August. If so, it would be the 41st consecutive month of growth in annual core sales and also the most considerable rate of increase since April, when sales rose 4.7%.
Retail sales represent a short-term indicator, which provides key information about consumption on a national scale. Higher retail sales suggest stronger consumer demand, confidence and economic growth, respectively. Therefore, in case the index of retail sales increased at a faster-than-expected pace, this would be pound positive. The Office for National Statistics is expected to publish the official report at 8:30 GMT.
United States
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on October 16th, probably increased to 265 000, according to market expectations, from 255 000 in the previous week. The latter has been the lowest number of claims since the business week ended on July 17th, when 255 000 claims were reported. It has also been the lowest level since November 1973.
The 4-week moving average, an indicator lacking seasonal effects, was 265 000, marking a decrease of 2 250 compared to the preceding weeks revised down average. It has been the lowest level for this average since December 15th 1973, when 256 750 claims were reported.
The business week, which ended on October 9th has been the 32nd consecutive week, when jobless claims stood below the 300 000 threshold.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar.
The number of continuing jobless claims probably increased to the seasonally adjusted 2 188 000 during the business week ended on October 9th, from 2 158 000 in the prior week. It has been the lowest number of claims since November 4th 2000, when a level of 2 110 000 was reported. It also represented a drop by 50 000 compared to the revised up number of claims reported in the week ended on September 25th. 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.
Existing Home Sales
The index of existing home sales in the United States probably rose 1.0% to a level of 5.38 million in September compared to August, according to the median estimate by experts. In August sales were 4.8% lower from a month ago to reach 5.31 million, or the lowest level since April 2015 (5.04 million).
The sample of data encompasses condos, co-ops and single-family houses. Statistical data on existing home sales are often used along with statistical figures regarding the new home sales and pending home sales, with the major objective being to draw a conclusion how the nation’s housing sector is performing, regardless of interest rates.
The report on existing home sales usually does not cause a real direct impact on US economy. Actually, this effect appears to be minimal, due to the fact that nothing is produced with the mere sale of an existing home. In terms of economic activity, the sale of an existing house may be related only to interior design and purchases of new furniture.
In case the index increased at a steeper monthly rate than anticipated, this would have a limited bullish effect on the US dollar. The National Association of Realtors (NAR) is to release the official figure at 14:00 GMT.
CB Leading Indicator
The Conference Board Leading Economic Index for the United States probably remained unchanged in September compared to a month ago, according to the median estimate by experts. In August the index rose at a monthly rate of 0.1%.
It encompasses a variety of economic indicators, which signify possible changes in overall economic activity. The index is comprised by the following components: average weekly hours in manufacturing, average weekly initial claims for unemployment insurance, manufacturers’ new orders, consumer goods and materials, ISM Index of New Orders, manufacturers new orders, nondefense capital goods excluding aircraft orders, building permits, new private housing units, Stock prices, 500 common stocks, Leading Credit Index, interest rate spread, 10-year Treasury bonds less federal funds, average consumer expectations for business conditions. Worse-than-expected performance of the index would have a moderate bearish effect on the US dollar. The Conference Board research group will release the official data at 14:00 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.602% on October 21st, after which it closed at 0.552% to lose 2.6 basis points (0.026 percentage point) compared to October 20th. It has been the fourth drop in the past eight trading days.
The yield on US 2-year government bonds climbed as high as 0.641% on October 21st, or the highest level since October 12th (0.641%), after which it fell to 0.625% at the close to lose 0.008 percentage point compared to October 20th. It has been the sixth decline in the past eight trading days.
The spread between 2-year US and 2-year UK bond yields narrowed to 0.073% on October 21st from 0.055% on October 20th. The October 21st yield spread has been the largest one since October 15th, when the difference was 0.074%.
Meanwhile, the yield on UK 10-year government bonds soared as high as 1.863% on October 21st, after which it slid to 1.800% at the close to lose 6.6 basis points (0.066 percentage point) compared to October 20th. It has been the third drop in the past eight trading days.
The yield on US 10-year government bonds climbed as high as 2.072% on October 21st, after which it slipped to 2.021% at the close to lose 4.8 basis points (0.048 percentage point) compared to October 20th. It has been the fifth drop in the past eight trading days.
The spread between 10-year US and 10-year UK bond yields widened to 0.221% on October 21st from 0.203% on October 20th. The October 21st yield difference has been the largest one since October 16th, when the spread was 0.235%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.5426
R2 – 1.5432
R3 (range resistance) – 1.5440
R4 (range breakout) – 1.5459
S1 – 1.5412
S2 – 1.5406
S3 (range support) – 1.5399
S4 (range breakout) – 1.5379
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.5381
R1 – 1.5564
R2 – 1.5693
R3 – 1.5876
S1 – 1.5252
S2 – 1.5069
S3 – 1.4940
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