Yesterday’s trade saw GBP/USD within the range of 1.5171-1.5246. The pair closed at 1.5231, up 0.12% on a daily basis, while marking its fourth consecutive trading day of advance. The daily high has been the highest level since November 5th, when a high of 1.5402 was reached.
At 8:13 GMT today GBP/USD was down 0.07% for the day to trade at 1.5217. The pair touched a daily low at 1.5199 at 6:15 GMT, undershooting the lower range breakout level (S4).
Today GBP/USD trading may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United States
Retail sales
Retail sales in the United States probably rose 0.3% in October on a monthly basis, according to the median forecast by experts. In September sales were up another 0.1%, while the August performance was revised down to flat from a 0.2% gain previously.
Among the 13 major categories, 5 registered growth, 7 showed declines and 1 showed no change. In September, the largest increases were reported for motor vehicle and parts dealers (1.7%), clothing and accessories (0.9%), sporting goods, hobby, books and music stores (0.9%), food services and drinking places (0.7%) and furniture stores (0.6%). On the other hand, the largest decrease in sales was recorded at gasoline stations (-3.2%). Lower sales were reported also for miscellaneous store retailers (-1.3%), building material and garden equipment supplies dealers (-0.3%), food and beverage stores (-0.3%), nonstore retailers (-0.2%), electronics and appliance stores (-0.2%) and general merchandise stores (-0.1%), according to the report by the US Census Bureau.
Annualized retail sales surged 2.4% in September, following a 2.0% climb in August.
US core retail sales, or retail sales ex autos, probably went up 0.4% in October compared to a month ago, following a 0.3% drop in September. If so, Octobers rate of increase would be the fastest one since July. This indicator removes large ticket prices and historical seasonality of automobile sales.
In case the general index showed a larger increase than projected, this would have a strong bullish effect on the US dollar. The official report by the US Census Bureau is due out at 13:30 GMT.
Producer prices
Annual producer prices in the United States probably fell for a ninth month in a row in October, by 1.2%, according to the median estimate by experts. If so, it would be the sharpest annual drop since April, when producer prices slumped 1.3%. In September the annualized Producer Price Index decreased 1.1%. It reflects the change in prices of over 8 000 products, sold by manufacturers during the respective period. The Producer Price Index (PPI) differs from the Consumer Price Index (CPI), which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the country. The logic behind this indicator is that in case producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. In case annual producer prices fell at a larger rate than anticipated, this would have a moderate bearish effect on the US dollar.
The nation’s annualized core producer price inflation, which excludes prices of volatile categories such as food and energy, probably decelerated to 0.5% in October from 0.8% in the prior month. If so, this would be the lowest annual surge in the core PPI in more than eight years. The Bureau of Labor Statistics is expected to report on the official PPI performance at 13:30 GMT.
Reuters/Michigan Consumer Sentiment Index – preliminary reading
The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States improved for a second straight month in November. The preliminary reading of the corresponding index, which usually comes out two weeks ahead of the final data, probably rose to 91.5 during the current month from a final reading of 90.0 in October. If so, November would mark the highest level of confidence since August, when the gauge was reported at a final 91.9. The survey encompasses about 500 respondents throughout the country. The index is comprised by two major components, a gauge of current conditions and a gauge of expectations. The current conditions index is based on the answers to two standard questions, while the index of expectations is based on three standard questions. All five questions have an equal weight in determining the value of the overall index.
The sub-index of current economic conditions decreased to a final reading of 102.3 from a preliminary 106.7 in October, after a month ago it stood at 101.2.
The sub-index of consumer expectations came in at a reading of 82.1, down from a preliminary value of 82.7 in October, but improving from a final reading of 78.2, registered in September.
Participants in the October survey expect that the rate of inflation will ease down to 2.7% during the next year from 2.8% in September, or unchanged compared to the preliminary data.
In case the gauge of consumer sentiment increased at a steeper pace than projected in November, this would have a moderate-to-strong bullish effect on the greenback. The preliminary reading is due out at 15:00 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.734% on November 12th, or the highest level since November 9th (0.770%), after which it closed at 0.696% to lose 3 basis points (0.03 percentage point) compared to November 11th. It has been the fourth drop in the past nine trading days.
The yield on US 2-year government bonds climbed as high as 0.887% on November 12th, or the highest level since November 10th (0.891%), after which it closed at 0.883% to add 0.005 percentage point compared to November 11th. It has been the eighth gain in the past nine trading days and also a second consecutive one.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, expanded to 0.187% on November 12th from 0.152% on November 11th. The November 12th yield spread has been the largest one in at least six months.
Meanwhile, the yield on UK 10-year government bonds soared as high as 2.062% on November 12th, or the highest level since November 9th (2.089%), after which it slid to 2.009% at the close to lose 4.1 basis points (0.041 percentage point) compared to November 11th. It has been the third drop in the past nine trading days.
The yield on US 10-year government bonds climbed as high as 2.354% on November 12th, or the highest level since November 9th (2.377%), after which it slipped to 2.319% at the close to lose 1.2 basis points (0.012 percentage point) compared to November 11th. It has been the third consecutive trading day of decline.
The spread between 10-year US and 10-year UK bond yields expanded to 0.310% on November 12th from 0.281% on November 11th. The November 12th yield difference has been the largest one since September 28th, when the spread was 0.320%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.5238
R2 – 1.5245
R3 (range resistance) – 1.5252
R4 (range breakout) – 1.5272
S1 – 1.5224
S2 – 1.5217
S3 (range support) – 1.5210
S4 (range breakout) – 1.5190
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.5191
R1 – 1.5358
R2 – 1.5667
R3 – 1.5834
S1 – 1.4882
S2 – 1.4715
S3 – 1.4406
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