Yesterday’s trade saw GBP/USD within the range of 1.4327-1.4426. The pair closed at 1.4365, inching down 0.05% on a daily basis. It has been the 35th drop in the past 64 trading days and also a second consecutive one. GBP/USD lost a meager 0.09% of its value in March, following a 3.23% advance in the preceding month.
At 6:25 GMT today GBP/USD was inching down 0.05% for the day to trade at 1.4358. The pair touched a daily low at 1.4329 during mid-Asian trade, overshooting the range support level (S3), and a daily high at 1.4372 during the early phase of the Asian trading session.
On Friday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
Manufacturing PMI by Markit/CIPS
Activity in United Kingdom’s sector of manufacturing probably increased at a faster pace in March compared to a month ago, with the corresponding Purchasing Managers Index coming in at a reading of 51.2, according to the median forecast by experts, up from 50.8 in February. The latter has been the lowest reading since April 2013. If expectations were met, March would be the 35th consecutive month, when the PMI stood above the key level of 50.0.
The index is based on a survey, encompassing managers of companies, that operate in sectors such as manufacturing, mining, utilities. They are asked about their estimate in regard to current business conditions in the sector in terms of new orders, output, employment, demand in the future. Values above 50.0 signify that respondents are rather optimists about business conditions in the sector than pessimists.
In case the PMI accelerated more than projected in March, this would have a strong bullish effect on the sterling. The Chartered Institute of Purchasing and Supply (CIPS) is expected to release the official PMI reading at 8:30 GMT.
United States
Non-farm Payrolls, Unemployment Rate, Average Earnings Per Hour
Employers in all sectors of economy in the United States, excluding the farming industry, probably added 205 000 new jobs in March, according to the median forecast by experts, after a job gain of 242 000 in February.
Employment in health care and social assistance rose by 57 000 job positions in February. Retail trade employment continued to increase in February (+55 000), while that in food services and drinking places went up by 40 000. Employment increased also in private educational services (+28 000), construction (+19 000), but continued to decline in mining (-19 000), according to the report by the Bureau of Labor Statistics (BLS). Employment in other key industries such as manufacturing, wholesale trade, transportation and warehousing, financial activities, professional and business services, and government remained little changed during the month.
Average Hourly Earnings probably increased 0.2% in March compared to the prior month, according to market expectations, following an unexpected 0.1% drop in February.
Meanwhile, the rate of unemployment in the country probably remained at 4.9% for a third consecutive month in March, according to market expectations. It has been the lowest level since February 2008, when a rate of 4.8% was reported.
The total number of people unemployed was almost unchanged at 7.9 million in February. The unemployment rate for adult men (4.5%), adult women (4.5%), teenagers (15.6%), whites (4.3%), blacks (8.8%), Asians (3.8%), and Hispanics (5.4%) showed little or no change during the month. The number of long-term unemployed (those looking for employment for 27 weeks or more) was almost unchanged at 2.2 million during February and comprised 27.7% of the unemployed, according to the BLS. In case job growth was higher than anticipated and the rate of unemployment met expectations or fell further, this would have a strong bullish effect on the US dollar. The official employment data are due out at 12:30 GMT.
Manufacturing PMI by Markit – final reading
The final estimate of the Manufacturing Purchasing Managers Index for March probably rose to 51.5, according to the median forecast by analysts, inching up from a flash estimate of 51.4, which was reported on March 22nd. In February the final seasonally adjusted PMI stood at 51.3, up from a preliminary value of 51.0.
According to the preliminary report by Markit, ”Slightly stronger rates of output, new business and employment growth helped to support the headline index in March, while a key factor weighing on the headline index was the sharpest decline in preproduction inventories since January 2014.”
”New business volumes continued to increase across the manufacturing sector, but the latest expansion was only slightly faster than in February and still weaker than the post-crisis trend. Survey respondents noted that lower capital spending across the energy sector and subdued export demand had weighed on overall new order growth. Reflecting this, latest data indicated that new work from abroad was unchanged in March, following a marginal decline during the previous month.”
”Manufacturers signalled a further reduction in their inventory volumes in March. The latest fall in stocks of finished goods was the fastest since November 2015, while pre-production inventories declined at the steepest pace for over two years. At the same time, input buying rose at only a modest pace and supplier performance was reported to have deteriorated slightly”, Markit stated.
Values above the key level of 50.0 indicate predominant optimism (expanding activity). In case the final PMI for March came above the preliminary reading and market expectations, this would lead to a moderate bullish impact on the US dollar. The final reading is due out at 13:45 GMT.
Reuters/Michigan Consumer Sentiment Index – final reading
The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States was lower in March from a month ago. The final reading of the corresponding index, which usually comes out two weeks after the preliminary data, probably came in at 90.5, up from a preliminary value of 90.0. If market expectations were met, this would be the lowest level since October 2015, when the gauge of sentiment was reported at a final 90.0. In February the index stood at a final reading of 91.7, improving from a preliminary value of 90.7. The survey encompasses about 500 respondents throughout the country. The index is comprised by two major components, a gauge of current conditions and a gauge of expectations. The current conditions index is based on the answers to two standard questions, while the index of expectations is based on three standard questions. All five questions have an equal weight in determining the value of the overall index.
According to preliminary data, the sub-index of current economic conditions, which measures US consumers’ views of their personal finances, went down to 105.6 in March from a final reading of 106.8 in February. The sub-index of consumer expectations slowed down to a flash reading of 80.0 in March from a final value of 81.9 in February.
Respondents in the March survey expect that the rate of inflation during the next year will probably be at 2.7%, or accelerating from 2.5% as expected in the February survey.
In case the final value of the March consumer sentiment index outpaced the median forecast by analysts, this would have a moderate bullish effect on the US dollar. The final reading is due out at 14:00 GMT.
ISM Manufacturing PMI
Activity in United States’ manufacturing sector probably increased for the first time in five months in March, with the corresponding manufacturing PMI coming in at a reading of 50.7, according to expectations, up from 49.5 in February.
The New Orders Index came in at 51.5 in February, while matching the rate in January. The sub-gauge of production was reported at 52.8, advancing from 50.2 in January. The index of employment increased to a value of 48.5 in February from 45.9 in the preceding month. The gauge of prices was at 38.5 in February, improving from 33.5 in January, which suggested lower prices of raw materials for a 16th month in a row. In January, 9 manufacturing industries reported growth, 7 reported contraction in overall business activity and 2 reported no change in conditions, according to the report by the Institute for Supply Management (ISM).
Values above 50.00 are indicative of predominant optimism (expansion in activity). In case the PMI accelerated more than anticipated, this would have a strong bullish effect on the US dollar. The Institute for Supply Management (ISM) is to release the official reading at 14:00 GMT.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4374
R2 – 1.4383
R3 (range resistance) – 1.4393
R4 (range breakout) – 1.4419
S1 – 1.4356
S2 – 1.4347
S3 (range support) – 1.4338
S4 (range breakout) – 1.4311
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4226
R1 – 1.4397
R2 – 1.4651
R3 – 1.4822
S1 – 1.3972
S2 – 1.3801
S3 – 1.3547
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