Forex Market: GBP/USD daily trading outlook

Yesterday’s trade saw GBP/USD within the range of 1.4356-1.4474. The pair closed at 1.4457, retreating 0.43% compared to Fridays close. It has been the 30th drop in the past 52 trading days. The daily low has been the lowest level since May 16th, when a low of 1.4330 was registered. The major pair has edged up 0.25% so far in June, following a 0.92% drop in the prior month.

At 6:35 GMT today GBP/USD was edging up 0.36% on the day to trade at 1.4509. The pair touched a daily high at 1.4658 during late Asian trade and a daily low at 1.4438 during the early phase of the Asian trading session.

On Tuesday GBP/USD trading may be influenced by the following macroeconomic report as listed below.

Fundamentals

United States

Consumer Credit Change

The money amounts, borrowed by US consumers probably increased by USD 19.00 billion in April, according to market expectations, following a surge by USD 29.67 billion in March. Non-revolving credit expanded by USD 18.58 billion in March, following a surge by USD 11.24 billion in February. At the same time, revolving credit rose by USD 11.10 billion in March, following an increase by USD 2.91 billion in the preceding month.

Given the current state of the economy, a higher-than-expected amount borrowed is usually considered as dollar positive, as it implies a potential increase in consumer spending and accelerated growth, respectively. The Board of Governors of the Federal Reserve is to release the official numbers at 19:00 GMT.

Yellen expresses confidence in economic development

During her speech at the World Affairs Council of Philadelphia yesterday, Fed Chair Janet Yellen said that despite the weak job growth in all US economic segments with the exclusion of the farming industry in May, an encouraging aspect of the report was that average hourly earnings increased 2.5% over the past 12 months, or slightly outpacing performance in recent years. The latter, according to Yellen, may serve as an indication that wage growth in the country may finally be picking up.

“…although the economy recently has been affected by a mix of countervailing forces, I see good reasons to expect that the positive forces supporting employment growth and higher inflation will continue to outweigh the negative ones. As a result, I expect the economic expansion to continue, with the labor market improving further and GDP growing moderately. And as I just noted, I expect to see inflation moving up to 2 percent over the next couple of years”, Yellen emphasized.

“My overall assessment is that the current stance of monetary policy is generally appropriate, in that it is providing support to the economy by encouraging further labor market improvement that will help return inflation to 2 percent. At the same time, I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run.”

“Yellens comments yesterday downplayed the impact of the jobs data last week and gave a cautious sense of optimism on the outlook for the U.S. economy,” the head of Asia investment strategy at HSBC Private Bank, Fan Cheuk Wan said, cited by Investing.com. “Her comments point towards the world remaining stuck in a low-growth and low-yield environment which should be positive for risky assets and keep the dollar soft.”

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:

R1 – 1.4468
R2 – 1.4479
R3 (range resistance) – 1.4489
R4 (range breakout) – 1.4522

S1 – 1.4446
S2 – 1.4435
S3 (range support) – 1.4425
S4 (range breakout) – 1.4392

By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:

Central Pivot Point – 1.4543
R1 – 1.4701
R2 – 1.4883
R3 – 1.5041

S1 – 1.4361
S2 – 1.4203
S3 – 1.4021