Yesterday’s trade saw GBP/USD within the range of 1.4491-1.4608. The pair closed at 1.4542, going up 0.12% on a daily basis. It has been the first gain in the past seven trading days. The daily low has been the lowest level since June 9th 2010, when a low of 1.4404 was registered.
At 8:08 GMT today GBP/USD was losing 0.14% for the day to trade at 1.4523. The pair touched a daily low at 1.4515 at 8:02 GMT, undershooting the range support level (S3), and a daily high at 1.4561 during the early hours of the Asian trading session. Resistance may be encountered at the hourly 21-period EMA (1.4538) and then – at the hourly 55-period EMA (1.4557). Support may be received within the 1.4505-1.4520 area and then – at the low from January 11th (1.4491).
On Tuesday GBP/USD trading may be influenced by the macroeconomic reports and other events as listed below.
Fundamentals
United Kingdom
Industrial, Manufacturing Production
Annualized industrial production in the United Kingdom probably expanded 1.7% in November, according to market expectations, or at the same rate as in October. If so, November would be the 26th consecutive month, when the annual production index rose. In monthly terms, industrial production probably remained flat in November, according to expectations, following a 0.1% increase in October. Within the index, the largest increase was observed in the gauge for water supply, sewerage & waste management (+1.7% in October from a month ago). The index of industrial output 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 shrank 0.8% in November, according to the median forecast by analysts, following four consecutive months of contraction. In October manufacturing output fell at an annualized rate of 0.1%. In monthly terms, manufacturing production probably grew 0.1% in November, according to expectations, following a 0.4% contraction in October. As it is a key component of the country’s Gross Domestic Product, in case annual manufacturing production contracted more than projected, this would have a moderate bearish 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 December. During the three-month period to November the NIESR estimate pointed to a 0.6% GDP growth, which matched the estimate regarding the three-month period to October. The report is considered as highly reliable and usually heightens volatility of the pairs containing the pound.
United States
Feds Fischer statement
At 10:30 GMT the Vice Chairman of the Board of Governors of the Federal Reserve, Stanley Fischer, is expected to take a statement. Limited-to-moderate volatility of the currency pairs containing the US dollar is usually present during his speeches.
Job Openings
The number of job openings in the United States probably increased to 5.410 million in November from a month ago, according to the median forecast by experts. In October 5.383 million job openings were reported, or the lowest number since August. 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 0.549% on January 11th, after which it closed at 0.516% to lose 0.008 percentage point compared to January 8th. It has been the 11th drop in the past 18 trading days.
The yield on US 2-year government bonds climbed as high as 0.964% on January 11th, after which it closed at 0.940% to add 0.004 percentage point compared to January 8th. It has been the 8th gain in the past 19 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 0.424% on January 11th from 0.412% on January 8th. The January 11th yield spread has been the largest one since January 6th, when the difference was 0.459%.
Meanwhile, the yield on UK 10-year government bonds soared as high as 1.810% on January 11th, after which it closed at 1.773% to add 0.001 percentage point compared to January 8th. It has been the 7th gain in the past 18 trading days.
The yield on US 10-year government bonds climbed as high as 2.179% on January 11th, after which it slipped to 2.174% at the close to add 5.8 basis points (0.058 percentage point) compared to January 8th. It has been the 7th gain in the past 19 trading days.
The spread between 10-year US and 10-year UK bond yields widened to 0.401% on January 11th from 0.344% on January 8th. The January 11th yield difference has been the largest one since December 29th, when the spread was 0.405%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4553
R2 – 1.4563
R3 (range resistance) – 1.4574
R4 (range breakout) – 1.4606
S1 – 1.4531
S2 – 1.4520
S3 (range support) – 1.4510
S4 (range breakout) – 1.4478
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4613
R1 – 1.4722
R2 – 1.4924
R3 – 1.5033
S1 – 1.4411
S2 – 1.4302
S3 – 1.4100
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