Forex Market: GBP/USD daily trading forecast

Yesterday’s trade saw GBP/USD within the range of 1.5401-1.5498. The pair closed at 1.5416, shedding 0.15% on a daily basis. It has been the first loss in the past three trading days. The daily high has been the highest level since October 22nd, when a high of 1.5509 was registered. In weekly terms, GBP/USD appreciated 0.75% last week, following a 0.78% decline in the week ended on October 25th.

At 10:13 GMT today GBP/USD was losing 0.03% for the day to trade at 1.5412. The pair touched a daily low at 1.5404 at 9:43 GMT, testing both the daily S1 level and yesterdays low.

On Tuesday GBP/USD trading may be influenced by the macroeconomic reports listed below.

Fundamentals

United States

Factory Orders

Factory orders in the United States probably shrank for a second straight month in September, falling 0.9% on a monthly basis, according to market expectations. In August orders dropped 1.7%, or at the steepest monthly pace since December 2014, when the indicator posted a 3.5% slump. Excluding the sector of transportation, factory orders fell 0.8% in August compared to July, marking a second straight month of decline. 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 sector of manufacturing. In case new orders decreased at a faster-than-anticipated rate in September, this would have a moderate bearish effect on the US dollar, as it implies future growth obstacles. The US Census Bureau will release the official data at 15:00 GMT.

Bond Yield Spread

The yield on UK 2-year government bonds went as high as 0.670% on November 2nd, or the highest level since September 17th (0.731%), after which it closed at 0.647% to add 1.9 basis points (0.019 percentage point) compared to October 30th.

The yield on US 2-year government bonds climbed as high as 0.757% on November 2nd, or the highest level since September 17th (0.815%), after which it closed at 0.753% to add 2.5 basis points (0.025 percentage point) compared to October 30th.

The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, expanded to 0.106% on November 2nd from 0.100% on October 30th. The November 2nd yield spread has been the largest one since September 28th, when the difference was 0.162%.

Meanwhile, the yield on UK 10-year government bonds soared as high as 1.964% on November 2nd, or the highest level since September 17th (1.973%), after which it slid to 1.940% at the close to add 1.6 basis points (0.016 percentage point) compared to October 30th.

The yield on US 10-year government bonds climbed as high as 2.189% on November 2nd, or the highest level since September 25th (2.198%), after which it slipped to 2.167% at the close to add 2.1 basis points (0.021 percentage point) compared to October 30th.

The spread between 10-year US and 10-year UK bond yields expanded to 0.227% on November 2nd from 0.220% on October 30th. The November 2nd yield difference has been the largest one since October 29th, when the spread was 0.245%.

Daily and Weekly Pivot Levels

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

R1 – 1.5425
R2 – 1.5434
R3 (range resistance) – 1.5443
R4 (range breakout) – 1.5469

S1 – 1.5407
S2 – 1.5398
S3 (range support) – 1.5389
S4 (range breakout) – 1.5363

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

Central Pivot Point – 1.5379
R1 – 1.5518
R2 – 1.5607
R3 – 1.5746

S1 – 1.5290
S2 – 1.5151
S3 – 1.5062