Yesterday’s trade saw GBP/USD within the range of 1.4601-1.4729. The pair closed at 1.4696, rising 0.41% on a daily basis. It has been the 25th gain in the past 44 trading days and also a second consecutive one. The daily high has been the highest level since May 3rd, when a high of 1.4770 was reported. The major pair has extended its advance to 0.72% so far during the current month, following two consecutive months of advance.
At 7:39 GMT today GBP/USD was edging up 0.13% on the day to trade at 1.4715. The pair touched a daily high at 1.4739 at 7:01 GMT, overshooting the range resistance level (R3), and a daily low at 1.4693 during the early phase of the Asian trading session.
On Thursday GBP/USD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United Kingdom
Gross Domestic Product – second estimate
The second estimate of United Kingdoms GDP probably confirmed the preliminary estimate, released on April 27th, that economy expanded at a rate of 2.1% during the first quarter of 2016 compared to the same period a year ago. It also matched the rate of expansion in the final quarter of 2015, but yet, this has been the slowest annual rate of GDP growth in 3 years.
According to the preliminary data, within the services sector, distribution, hotels and restaurants rose 4.9% year-on-year in Q1, transport, storage and communication went up 4.1%, business services and finance increased 2.1%, while government and other services grew 1.6%. Output in the UK agricultural sector expanded 1.1%, industrial production grew by a mere 0.1%, while the nations construction contracted 1.7%, according to provisional data by the Office for National Statistics (ONS).
On a quarterly basis, the second estimate of the UK GDP probably also matched the preliminary estimate of a 0.4% growth during Q1, following a 0.6% expansion during the fourth quarter.
As market focus is strongly on the “Brexit” vote in June, in case the second GDP estimate revealed a slower annual growth than anticipated in Q1, this may not necessarily be a strong bearish signal for the sterling. It may be so, because a revised down GDP may suggest vote concerns have already begun to affect economic growth, while this may boost the case for a “No” vote next month, thus, providing support to the currency. The report is due out at 8:30 GMT.
United States
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on May 20th, probably fell to 275 000, according to market consensus, from 278 000 in the preceding week.
The 4-week moving average, an indicator lacking seasonal effects, was 275 750, marking an increase by 7 500 compared to the preceding weeks unrevised average.
The business week, which ended on May 13th has been the 63rd consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. It has been the longest streak in 43 years.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or decreased further, this would have a moderate bullish effect on the US dollar.
The number of continuing jobless claims probably fell to the seasonally adjusted 2 146 000 during the business week ended on May 13th, according to the median forecast by experts, from 2 152 000 in the preceding week. The latter represented a drop by 13 000 compared to the revised up number of claims reported in the week ended on April 29th. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.
The US Department of Labor is to release the weekly report at 12:30 GMT.
Durable Goods Orders
The value of durable goods orders in the United States probably rose 0.5% in April from a month ago, according to the median forecast by experts, following a 0.8% surge in March.
The value of shipments of manufactured durable goods, down in three of the past four months, dropped 0.5% (or USD 1.1 billion) in March to reach USD 237.0 billion. The value of unfilled orders for manufactured durable goods, down in three of the past four months, were down 0.1% (or USD 1.3 billion) in March to reach USD 1,182.5 billion. At the same time, the value of inventories of manufactured durable goods, down for the first time in the past 3 months, remained almost unchanged during the period at USD 394.1 billion, according to data by the US Census Bureau.
Non-defense new orders for capital goods dropped 1.1% (or USD 0.8 billion) in March to USD 71.6 billion, while defense new orders for capital goods soared 48.4% (or USD 3.8 billion) during the month to USD 11.6 billion.
The value of durable goods orders, excluding transportation, probably rose 0.3% in April from a month ago, according to expectations, following a 0.2% contraction in March. Large ticket orders, such as automobiles for civil use or aircraft, are not present in the calculation, as their value may be in a wide range. Therefore, this index provides a more reliable information in regard to orders for durable goods.
In case the general index rose at a faster-than-projected pace, this would have a strong bullish effect on the US dollar, due to positive implications in regard to the wider gauge of production, factory orders. The US Census Bureau is scheduled to release the official report at 12:30 GMT.
Pending Home Sales
The index of pending home sales in the United States probably rose 0.6% in April from a month ago, according to the median estimate by experts. In March pending home sales increased at a revised down 3.4% (3.5% previously), or the most since February 2015, when sales surged at a revised up 3.6%.
In annual terms, the index of pending home sales advanced 1.4% in March, which has been a 19th consecutive period of increase. In February pending home sales went up 0.7% year-on-year, or at the slowest rate in at least 2 years.
In case pending home sales increased at a faster pace than anticipated in April, 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 14:00 GMT.
Fed Speakers
At 9:15 GMT the Federal Reserve President for St. Louis and also a FOMC member, James Bullard, is expected to take a statement, followed by another member of the Committee, Jerome Powell, who is to speak at 16:00 GMT. Their remarks will be closely watched by markets for hints over the Banks future policy stance.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4708
R2 – 1.4719
R3 (range resistance) – 1.4731
R4 (range breakout) – 1.4766
S1 – 1.4684
S2 – 1.4673
S3 (range support) – 1.4661
S4 (range breakout) – 1.4626
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4498
R1 – 1.4665
R2 – 1.4830
R3 – 1.4997
S1 – 1.4333
S2 – 1.4166
S3 – 1.4001
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