Yesterday’s trade saw GBP/USD within the range of 1.4044-1.4159. The pair closed at 1.4057, losing 0.45% on a daily basis. It has been the 39th drop in the past 69 trading days and also a third consecutive one. GBP/USD has dropped 2.01% so far during the current month, following a 3.20% surge in March.
At 6:18 GMT today GBP/USD was edging up 0.14% for the day to trade at 1.4076. The pair touched a daily high at 1.4080 at 6:14 GMT, overshooting the daily R2 level, and a daily low at 1.4049 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.
United Kingdom
Fundamentals
Industrial, Manufacturing Production
Annualized industrial production in the United Kingdom probably remained flat in February, according to market expectations, following a largely expected 0.2% expansion in January. In monthly terms, industrial production probably rose 0.1% in February, according to expectations, following a 0.3% expansion in January. The latter has been the sharpest monthly increase since August 2015, when a revised down 0.9% surge was reported. Within the index, the largest increase was observed in the gauge for manufacturing (up 0.7% month-over-month and supported by factory and repair activities). The index of industrial output measures the change in the total inflation-adjusted value of production in sectors such as manufacturing, mining and utilities. Consistent rates of increase in industrial production suggest inflation pressure build-up.
United Kingdom’s annualized manufacturing production, a short-term indicator which accounts for almost 80% of the nation’s industrial output, probably shrank 0.7% in February, according to the median forecast by analysts. If so, February would be the 8th consecutive month of contraction. In January manufacturing output fell at an annualized rate of 0.1%, or the least since October 2015. In monthly terms, manufacturing production probably shrank 0.2% in February, according to the median estimate by experts, following a 0.7% increase in January. The latter has been the sharpest monthly expansion since September 2015. As it is a key component of the country’s Gross Domestic Product, in case annual manufacturing production shrank more than projected, this would have a moderate bearish effect on the sterling. The Office for National Statistics (ONS) will release the official industrial report at 8:30 GMT.
Balance of Trade
The deficit on United Kingdom’s goods trade balance probably narrowed to GBP 10.20 billion in February, according to market expectations, from a deficit figure of GBP 10.29 billion during the preceding month. If so, this would be the lowest deficit since September 2015, when a revised up gap of GBP 8.802 billion was reported.
This indicator is also known as visible trade balance, because it reflects the difference in value between exported and imported physical goods, without the inclusion of exported and imported services. Since UK economy is to a great extent dependent on trade, the visible trade balance is considered as a key factor, providing clues over the sustainability of economic growth.
The gap on the nations total trade balance narrowed to GBP 3.459 billion in January from a revised down GBP 3.699 billion deficit posted in December. It has been the lowest trade deficit since September 2015, supported by lower imports of unspecified goods and fuels.
In January, total exports inched up at a monthly rate of 0.07% to reach GBP 41.386 billion, as shipments of goods dropped by GBP 11 million, while export of services increased by GBP 42 million, according to the report by the Office for National Statistics (ONS). UK imports contracted at a monthly rate of 0.46% to reach GBP 44.845 billion during the same month. Purchases of goods went down by GBP 0.2 billion to reach GBP 33.2 billion in January, mostly reflecting lower imports of unspecified goods and fuels.
In case the UK trade deficit narrowed more than anticipated in January, this would have a moderate bullish effect on the sterling, because of positive implications regarding UK economic growth. The Office for National Statistics will publish the official trade data at 8:30 GMT.
GDP estimate by the NIESR
At 14:00 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 March. During the three-month period to February the NIESR estimate pointed to a 0.3% GDP growth, or the lowest since the period to March 2013, when a 0.1% growth rate was projected. The report is considered as highly reliable and usually heightens volatility of the pairs containing the pound.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4068
R2 – 1.4078
R3 (range resistance) – 1.4089
R4 (range breakout) – 1.4120
S1 – 1.4046
S2 – 1.4036
S3 (range support) – 1.4025
S4 (range breakout) – 1.3994
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4268
R1 – 1.4415
R2 – 1.4607
R3 – 1.4754
S1 – 1.4076
S2 – 1.3929
S3 – 1.3737
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