Friday’s trade saw GBP/USD within the range of 1.3852-1.4045. The pair closed at 1.3870, falling 0.67% on a daily basis. It has been the 25th drop in the past 40 trading days. GBP/USD has depreciated 1.83% so far during the current month. The daily low has been the lowest level since March 18th 2009, when a low of 1.3847 was registered. In weekly terms, GBP/USD lost 3.72% of its value in the past week, while extending the drop from the week ended on February 21st. The pair has depreciated 2.58% so far during the current month, while being poised to mark its fourth consecutive month of decline.
At 7:22 GMT today GBP/USD was edging up 0.14% for the day to trade at 1.3881. The pair touched a daily high at 1.3886 at 7:12 GMT, undershooting the daily R1 level, and a daily low at 1.3841 during early Asian trade.
On Monday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
Consumer Lending, Mortgage Approvals
Lending to consumers in the United Kingdom probably expanded to GBP 1.325 billion in January from GBP 1.169 billion in December. This indicator represents borrowing by the UK personal sector (individuals only) to fund current expenditures on goods and services, which are a driving force behind economic growth.
What we should stress on here is the following distinction on how this indicator is to be ”read” in different macroeconomic contexts. Within a booming economy, excessively high levels of consumer lending may be taken as an indication that economy itself is set to overheat. It is so, because individuals tend to borrow money in order to live beyond their means. Within a sluggish economy, however, in case lending to individuals expanded more than projected, this would usually have a moderate bullish effect on the sterling, and vice versa. Bank of England (BoE) is to release the official numbers at 9:30 GMT.
At the same time, the number of mortgage approvals in the United Kingdom probably increased to 73 500 in January, according to experts’ expectations, from 70 837 in December. If so, Januarys number would be the highest since January 2014, when a revised up number of 76.947 mortgages approved was reported (76.753 previously). Mortgage approvals are considered as a leading indicator, reflecting the health of the country’s housing market. In case the number of mortgages approved increased more than anticipated, this would imply potentially higher demand in the nations housing sector and, respectively, a positive impulse for overall economy. Therefore, it would have a moderate bullish effect on the sterling. Bank of England will release the official data at 9:30 GMT.
United States
Chicago Manufacturing Survey
The Chicago Purchasing Managers’ Index (PMI) probably slowed down to a reading of 54.0 in February, according to market expectations, from 55.6 during the prior month. The latter has been the highest reading since October 2015, when the PMI came in at 56.2. The index reflects business conditions in the region’s manufacturing sector and is interrelated with the Manufacturing Index, published by the Institute for Supply Management (ISM). A reading above the key level of 50.0 is indicative of optimism (expansion in manufacturing activity). In case the PMI slowed down more than forecast, this would have a moderate bearish effect on the US dollar. The ISM-Chicago Inc. will release the official reading of this key barometer at 14:45 GMT.
Pending Home Sales
The index of pending home sales in the United States probably rose 0.5% in January, according to the median estimate by experts. If so, this would be the sharpest monthly increase since July 2015, when sales went up 0.5% as well. In December pending home sales rose 0.1%.
In annual terms, the index of pending home sales advanced 4.2% in December, which has been a 16th consecutive month of increase and also the steepest rate since August 2015, when sales climbed 6.1%.
In case pending home sales increased at a faster pace than anticipated, this would have a moderate bullish effect on the US dollar. The National Association of Realtor’s (NAR) will report on the official index performance at 15:00 GMT.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.3888
R2 – 1.3905
R3 (range resistance) – 1.3923
R4 (range breakout) – 1.3976
S1 – 1.3852
S2 – 1.3835
S3 (range support) – 1.3817
S4 (range breakout) – 1.3764
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4014
R1 – 1.4177
R2 – 1.4483
R3 – 1.4646
S1 – 1.3708
S2 – 1.3545
S3 – 1.3239
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