Yesterday’s trade saw GBP/USD within the range of 1.4389-1.4478. The pair closed at 1.4450, edging up 0.30% on a daily basis. It has been the 16th gain in the past 33 trading days and also a fifth consecutive one. The daily high has been an almost exact test of the high from May 9th. The major pair has trimmed its loss to 1.05% so far during the current month, following two consecutive months of advance.
At 6:23 GMT today GBP/USD was inching up 0.08% on the day to trade at 1.4461. The pair touched a daily high at 1.4468 at 6:10 GMT, overshooting the daily R2 level, and a daily low at 1.4440 during late Asian trade.
On Wednesday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
Industrial, Manufacturing Production
Annualized industrial production in the United Kingdom probably shrank for a second consecutive month in March, according to market expectations, at a pace of 0.4%. In February the index of industrial output contracted 0.5% year-on-year, confounding market expectations of a flat performance. In monthly terms, industrial production probably rose 0.4% in March, according to expectations, following a 0.3% contraction in February. If so, this would be the sharpest monthly increase since August 2015, when a revised down 0.9% surge was reported. Within the index, the largest decrease was observed in the gauge for manufacturing (down 1.1% month-over-month), because of a 2.9% decline in transport equipment. In addition, the gauge of water supply, sewerage & waste management fell at a monthly rate of 0.6% in February. On the other hand, the gauge of mining and quarrying went up 3.6%, while that of electricity, gas, steam and air-conditioning rose 0.7% during the period. 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 decrease in industrial production suggest weaker inflation pressure.
United Kingdom’s annualized manufacturing production, a short-term indicator which accounts for almost 80% of the nation’s industrial output, probably shrank 1.9% in March, according to the median forecast by analysts. If so, March would be the 9th consecutive month of contraction, while the pace would be the fastest since May 2013, when a 2.9% slump was reported. In February manufacturing output fell at an annualized rate of 1.8%. In monthly terms, manufacturing production probably rose 0.3% in March, according to the median estimate by experts, following a 1.1% drop in February. The latter has been the sharpest monthly contraction since May 2014. 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.
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 April. During the three-month period to March the NIESR estimate pointed to a 0.3% GDP growth, or matching the prior periods projection. The report is considered as highly reliable and usually heightens volatility of the pairs containing the pound.
United States
Monthly Budget Statement
The United States probably recorded a government budget deficit of USD 100 billion in April, according to market expectations, after a budget gap of USD 108 billion during the previous month. The latter has been a 103% increase compared to the figure reported in March 2015.
In March total receipts fell 2.5% to USD 228 billion. Social security and other payroll taxes contributed to USD 95 billion, individual income taxes – USD 77 billion, corporate income taxes – USD 33 billion, while other taxes and duties – USD 23 billion.
Total outlays rose 17% to USD 336 billion during March. Social security contributed to USD 76 billion, Medicare – USD 48 billion, defense – USD 54 billion and interest on debt – USD 24 billion. In addition, other outlays were estimated at USD 134 billion, according to the report by the US Treasury.
The current fiscal year-to-date budget gap amounted to USD 461 billion, or a 5% increase compared to the same period a year earlier.
A smaller-than-projected budget deficit in April would have a moderate bullish effect on the US dollar. The Financial Management Service is to publish the official figure at 18:00 GMT.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4458
R2 – 1.4466
R3 (range resistance) – 1.4474
R4 (range breakout) – 1.4500
S1 – 1.4442
S2 – 1.4434
S3 (range support) – 1.4425
S4 (range breakout) – 1.4401
By using the traditional method of calculation again, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4538
R1 – 1.4661
R2 – 1.4892
R3 – 1.5015
S1 – 1.4307
S2 – 1.4184
S3 – 1.3953
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