Yesterday’s trade saw GBP/USD within the range of 1.4431-1.4524. The pair closed at 1.4456, rising 0.38% on a daily basis. It has been the 20th gain in the past 38 trading days and also a second consecutive one. The daily high has been the highest level since May 12th, when a high of 1.4534 was registered. The major pair has depreciated 1.25% so far during the current month, following two consecutive months of advance.
At 6:26 GMT today GBP/USD was edging down 0.15% on the day to trade at 1.4434. The pair touched a daily high at 1.4463 during the early phase of the Asian trading session and a daily low at 1.4425 at 6:20 GMT.
On Wednesday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
Claimant count change, ILO Unemployment rate
The number of jobless claims in the United Kingdom probably rose for a second consecutive month in April, going up by 4 300, according to market expectations. In March claims were 6 700 more, which has been the largest monthly increase since May 2012. The number of people claiming unemployment benefits was registered at 732 100 in March, or the first increase since last August and also the highest level since October 2012.
The rate of unemployment in the UK, estimated in accordance with ILO (International Labour Organization) standards, probably remained at 5.1% for a fifth consecutive three-month period during the three months to March compared to the same period a year ago. It has been the lowest rate since the three-month period to October 2005.
During the period December-February there were 31.41 million people in employment, or an increase by 20 000 compared to the three months to November 2015. Compared to December-February 2015, the figure represented an increase by 360 000. 22.98 million people were in full-time employment during the period December-February, or 289 000 more compared to the same period a year earlier. At the same time, 8.43 million people were in part-time employment, or an increase by 71 000 compared to a year ago. The rate of employment was registered at 74.1%, or the highest since 1971, when records were initiated.
During the period December-February, 1.70 million people were unemployed, or 21 000 more than those reported during the three months to November 2015. Compared to December-February 2015, the figure represented a decrease by 142 000.
In December to February there were 8.87 million people aged between 16 and 64, who were out of work and not seeking or available for employment, according to data by the Office for National Statistics (ONS). This represented a decrease by 121 000 compared to the three-month period to February 2015 and has also been the lowest figure since the three-month period to July 2003.
Average earnings including bonuses probably went up 1.7% during the three months to March 2016 compared to the same period a year ago. In the three-month period to February 2016 earnings grew 1.8% to GBP 491 per week. Pay growth has been above the rate of consumer inflation since the beginning of 2015, which led to a sound increase in real income. However, wage growth is still lower compared to the period preceding the financial crisis.
In case the rate of unemployment met expectations or fell even further while the number of claims rose less than projected, this would have a strong bullish effect on the sterling. The official report by the ONS is due out at 8:30 GMT.
United States
FOMC Minutes
At 18:00 GMT the Federal Open Market Committee (FOMC) will release the minutes from its meeting on policy held on April 26th-27th. The minutes offer detailed insights on FOMC’s monetary policy stance. This release will be closely examined by market players, as it may provide clues over how the Feds policy tightening cycle will develop in the future. High volatility of the currency pairs containing the US dollar is usually present after the publication.
Last month the Federal Open Market Committee left the target range for the federal funds rate intact between 0.25% and 0.50%, as largely expected, citing improvement in US labor market, but also a certain slowdown in economic activity. According to extracts from the FOMC Policy Statement, released on April 27th: “Growth in household spending has moderated, although households’ real income has risen at a solid rate and consumer sentiment remains high. Since the beginning of the year, the housing sector has improved further but business fixed investment and net exports have been soft.”
“Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further.”
“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”
Daily and Weekly Pivot Levels
By using the traditional method of calculation, the daily pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4470
R1 – 1.4510
R2 – 1.4563
R3 – 1.4603
S1 – 1.4417
S2 – 1.4377
S3 – 1.4324
By using the traditional method of calculation again, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4410
R1 – 1.4482
R2 – 1.4602
R3 – 1.4674
S1 – 1.4290
S2 – 1.4218
S3 – 1.4098
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