Yesterday’s trade saw GBP/USD within the range of 1.5040-1.5116. The pair closed at 1.5049, down 0.40% on a daily basis, while extending the loss from Friday. The daily low has been the lowest level since December 3rd, when a low of 1.4902 was registered.
At 8:34 GMT today GBP/USD was losing 0.16% for the day to trade at 1.5031. The pair touched a daily low at 1.5025 at 8:35 GMT, overshooting the range support level (S3). Short-term support may be received at the psychological 1.5000 level, while short-term resistance may be encountered at the hourly 55-day Exponential Moving Average.
Today GBP/USD trading may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United Kingdom
Industrial, Manufacturing production
Annualized industrial production in the United Kingdom probably expanded 1.3% in October, according to market expectations, following a 1.1% gain during the preceding month. If so, October would be the 25th consecutive month, when the annual production index rose. In monthly terms, industrial production probably remained flat in October, according to expectations, following a 0.2% slump in September. The index measures the change in the total inflation-adjusted value of production in sectors such as manufacturing, mining and utilities. Higher rates of increase in industrial production suggest inflationary pressure.
United Kingdom’s annualized manufacturing production, a short-term indicator which accounts for almost 80% of the nation’s industrial output, probably expanded 0.1% in October, according to the median forecast by analysts, following four consecutive months of contraction. In September manufacturing output fell at an annualized rate of 0.6%, driven by a 13.7% slump in production of machinery and equipment. In monthly terms, manufacturing production probably showed no growth in October, according to expectations, following two straight months of expansion. In September output rose 0.8%, supported by a 3.5% growth in the ”other manufacturing and repair” segment. As it is a key component of the country’s Gross Domestic Product, in case annual manufacturing production grew more than projected, this would have a moderate bullish effect on the sterling. The Office for National Statistics (ONS) will release the official industrial data at 9:30 GMT.
GDP Estimate by the NIESR
At 15:00 GMT the National Institute of Economic and Social Research (NIESR) will release its estimate in regard to UK Gross Domestic Product over the three months to November. During the three-month period to October the NIESR estimate pointed to a 0.6% GDP growth. The report is considered as highly reliable and usually heightens volatility of the pairs containing the sterling.
United States
Job Openings
The number of job openings in the United States probably dropped to 5.525 million in October from a month ago, according to the median forecast by experts. In September 5.526 million job openings were reported, or the most since July. This indicator refers to all job positions that are open, but not filled on the last business day of the month. Job openings are part of the Job Openings and Labor Turnover Survey (JOLTS), which gathers data from about 16 400 non-farm establishments including retailers and manufacturers, as well as federal, state, and local government entities in the 50 states and the District of Columbia. The survey assesses the unmet demand for labor in the labor market. Higher-than-projected number of openings will usually have a limited bullish effect on the US dollar. The Bureau of Labor Statistics is to release the official data at 15:00 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.661% on December 7th, after which it closed at 0.578% to lose 7.7 basis points (0.077 percentage point) compared to December 4th. It has been the tenth drop in the past sixteen trading days and also a second consecutive one.
The yield on US 2-year government bonds climbed as high as 0.967% on December 7th, after which it closed at 0.935% to lose 1.2 basis points (0.012 percentage point) compared to December 4th. It has been the fourth drop in the past sixteen 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, widened to 0.357% on December 7th from 0.292% on December 4th. The December 7th yield spread has been the largest one since December 2nd, when the difference was 0.372%.
Meanwhile, the yield on UK 10-year government bonds soared as high as 1.929% on December 7th, after which it slid to 1.808% at the close to lose 12 basis points (0.120 percentage point) compared to December 4th. It has been the eleventh drop in the past sixteen trading days.
The yield on US 10-year government bonds climbed as high as 2.292% on December 7th, after which it slipped to 2.236% at the close to lose 3.7 basis points (0.037 percentage point) compared to December 4th. It has been the eleventh drop in the past sixteen trading days and also a second consecutive one.
The spread between 10-year US and 10-year UK bond yields widened to 0.428% on December 7th from 0.344% on December 4th. The December 7th yield difference has been the largest one since December 3rd, when the spread was 0.436%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.5056
R2 – 1.5063
R3 (range resistance) – 1.5071
R4 (range breakout) – 1.5091
S1 – 1.5042
S2 – 1.5035
S3 (range support) – 1.5028
S4 (range breakout) – 1.5007
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.5055
R1 – 1.5217
R2 – 1.5322
R3 – 1.5484
S1 – 1.4950
S2 – 1.4788
S3 – 1.4683
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