Yesterday’s trade saw GBP/USD within the range of 1.5048-1.5126. The pair closed at 1.5077, gaining 0.14% on a daily basis, while extending its advance from Monday. The daily high has been the highest level since November 26th, when a high of 1.5133 was registered.
At 8:20 GMT today GBP/USD was losing 0.13% for the day to trade at 1.5062. The pair touched a daily low at 1.5056 at 8:18 GMT, undershooting the range support level (S3).
Today GBP/USD trading may be influenced by a number of macroeconomic reports and other events as listed below.
Fundamentals
United Kingdom
Construction PMI by Markit/CIPS
Activity in United Kingdom’s sector of construction probably increased at a slower pace in November, with the corresponding Purchasing Managers Index coming in at 58.4, down from a reading of 58.8 in October. If so, November would be the 31st consecutive month, when the gauge inhabited the area above 50.0. The index is based on a survey, encompassing managers of companies, operating in the construction sector. They are asked about their estimate regarding current business conditions (new orders, output, employment, demand in the future). Values above the key level of 50.0 signify predominant optimism in regard to business conditions. In case the PMI rose less than anticipated in November, this would have a moderate bearish effect on the sterling. The Chartered Institute of Purchasing and Supply (CIPS) is to release the official index reading at 9:30 GMT.
United States
Change in employment by the ADP
Employers in the US non-farm private sector probably added 190 000 new jobs during November, according to the median estimate by experts, following 182 000 new positions added in October. The latter has been the smallest gain in jobs since April 2015, when 169 000 positions were added. The employment report by Automated Data Processing Inc. (ADP) is based on data that encompasses 400 000 – 500 000 companies employing over 24 million people, working in the 19 major sectors of the economy. The ADP employment change indicator is calculated in accordance with the same methodology, which the Bureau of Labor Statistics (BLS) uses. Published two days ahead of the governments employment statistics, this report is used by traders and market analysts as a reliable predictor of the official non-farm payrolls data. Creation of jobs has a direct link to consumer spending, while the latter is a major driving force behind growth in a consumption-based economy. Therefore, in case new jobs growth came above expectations, this would have a moderate-to-strong bullish effect on the US dollar. The official figure is scheduled to be released at 13:15 GMT.
Feds Yellen speech
At 16:00 GMT the Fed Chair Janet Yellen is expected to take a statement. Moderate-to-high volatility of the currency pairs containing the US dollar is usually present during such events.
Feds Beige Book report
At 19:00 GMT the Federal Reserve is to release its ”Beige Book” report, which is published eight times during the year. Each of the banks in the 12 Federal Reserve Districts gathers data in regard to current economic situation in the country on the basis of interviews with key business contacts, economists, market experts, and other sources. In case the Beige Book presents an optimistic economic outlook, this will usually support the greenback, while a pessimistic view will have a bearish effect on the currency.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.645% on December 1st, or the highest level since November 23rd (0.656%), after which it closed at 0.564% to lose 4.7 basis points (0.047 percentage point) compared to November 30th. It has been the fourth drop in the past seven trading days.
The yield on US 2-year government bonds climbed as high as 0.950% on December 1st, after which it closed at 0.919% to lose 1.5 basis points (0.015 percentage point) compared to November 30th. It has been the second drop in the past twelve trading days.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.355% on December 1st from 0.323% on November 30th. The December 1st yield spread has been the largest one in more than seven months.
Meanwhile, the yield on UK 10-year government bonds soared as high as 1.864% on December 1st, or the highest level since November 26th (1.879%), after which it slid to 1.763% at the close to lose 6.7 basis points (0.067 percentage point) compared to November 30th. It has been the fifth drop in the past seven trading days.
The yield on US 10-year government bonds climbed as high as 2.239% on December 1st, after which it slipped to 2.155% at the close to lose 5.3 basis points (0.053 percentage point) compared to November 30th. It has been the seventh consecutive trading day of decrease.
The spread between 10-year US and 10-year UK bond yields widened to 0.392% on December 1st from 0.378% on November 30th. The December 1st yield difference has been the largest one since November 27th, when the spread was 0.407%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.5084
R2 – 1.5091
R3 (range resistance) – 1.5099
R4 (range breakout) – 1.5120
S1 – 1.5070
S2 – 1.5062
S3 (range support) – 1.5055
S4 (range breakout) – 1.5034
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.5087
R1 – 1.5147
R2 – 1.5256
R3 – 1.5316
S1 – 1.4978
S2 – 1.4918
S3 – 1.4809
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