Yesterday’s trade saw GBP/USD within the range of 1.5188-1.5249. The pair closed at 1.5239, rising 0.16% on a daily basis, while extending the gain from Tuesday. The daily high was a higher-high test of the high from November 17th and also the highest level since November 13th, when a high of 1.5266 was registered.
At 8:01 GMT today GBP/USD was gaining 0.26% for the day to trade at 1.5274. The pair touched a daily high at 1.5294 during the Asian trading session. It has been the highest level since November 5th, when a daily high of 1.5402 was reached. The pair has been holding above the weekly central pivot level for a second straight trading day. Resistance may be encountered in the area between 1.5315-1.5330.
Today GBP/USD trading 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 4.2% in October, according to the median forecast by experts, after in September sales increased by another 6.5%, or the most since April 2014. If so, October would be the 31st consecutive month of sales growth.
In monthly terms, retail sales probably fell 0.5% in October, according to market expectations, following three consecutive monthly increases. In September retail sales went up 1.9%, or the most since December 2013, when a monthly rate of 2.5% was reported. Sales of household goods marked the largest increase in September (+4.7%), followed by sales of auto fuel (+3.8%), non-store sales (+3.4%) and food sales (+2.3%). On the other hand, sales at textile, clothing and footwear stores were 0.9% lower during the same month.
Annualized retail sales, without taking into account fuel sales, probably surged 3.9% in October, following a 5.9% increase in September. The latter has been the steepest monthly rate of increase since November 2014, when core sales went up 6.8%. If expectations were met, October would be the 42nd consecutive month of growth in annual core sales.
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 9:30 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 November 13th, probably decreased to 271 000, according to market expectations, from 276 000 in the previous week.
The 4-week moving average, an indicator lacking seasonal effects, was 267 750, marking an increase of 5 000 compared to the preceding weeks unrevised average.
The business week, which ended on November 6th has been the 36th consecutive week, when jobless claims stood below the 300 000 threshold, which implied a healthy labor market.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or decreased further, this would have a moderate bullish effect on the US dollar.
The number of continuing jobless claims probably dropped to the seasonally adjusted 2 170 000 during the business week ended on November 6th, according to market expectations, from 2 174 000 in the preceding week. The latter represented an increase by 5 000 compared to the revised up number of claims reported in the week ended on October 23rd. 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 13:30 GMT.
Philadelphia Fed Manufacturing Survey
The Philadelphia Fed Manufacturing Index probably improved for a second straight month in October, to reach a level of -1.0, according to the median forecast by experts, from -4.5 index points during September. If so, however, October would be the third consecutive month, when the gauge inhabited negative territory. The index is based on a monthly business survey (the Business Outlook Survey), measuring manufacturing activity in the third district of the Federal Reserve, Philadelphia. Participants give their opinion about the direction of business changes in overall economy and different indicators of activity in their companies, such as employment, working hours, new and existing orders, deliveries, inventories, delivery time, price etc. The survey is conducted every month since May 1968. The results are presented as the difference between the percentages of positive and negative projections. A level above zero is indicative of improving conditions, while a level below zero is indicative of worsening conditions. Higher-than-expected index readings would usually have a moderate bullish effect on the greenback. The Federal Reserve Bank of Philadelphia is expected to release the official results from the survey at 15:00 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.666% on November 18th, after which it closed at 0.639% to lose 1.3 basis points (0.013 percentage point) compared to November 17th. It has been the sixth drop in the past eight trading days.
The yield on US 2-year government bonds climbed as high as 0.908% on November 18th, or the highest level since November 9th (0.910%), after which it closed at 0.884% to add 2.1 basis points (0.021 percentage point) compared to November 17th. It has been the third consecutive trading day of gains.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, expanded to 0.245% on November 18th from 0.211% on November 17th. The November 18th 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 1.959% on November 18th, after which it slid to 1.924% at the close to lose 3.8 basis points (0.038 percentage point) compared to November 17th. It has been the fifth drop in the past eight trading days.
The yield on US 10-year government bonds climbed as high as 2.299% on November 18th, after which it slipped to 2.275% at the close to remain unchanged compared to November 17th.
The spread between 10-year US and 10-year UK bond yields expanded to 0.351% on November 18th from 0.313% on November 17th. The November 18th 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 – 1.5245
R2 – 1.5251
R3 (range resistance) – 1.5256
R4 (range breakout) – 1.5273
S1 – 1.5233
S2 – 1.5228
S3 (range support) – 1.5221
S4 (range breakout) – 1.5205
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.5179
R1 – 1.5320
R2 – 1.5407
R3 – 1.5548
S1 – 1.5092
S2 – 1.4951
S3 – 1.4864
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